Generally,a relatively high P/E ratio indicates:
A)improvements in future profitability.
B)diminished future profitability.
C)a high level of debt financing.
D)a high current return for shareholders of a company.

Question

Quizplus · Accepted Answer

A relatively high P/E ratio is an indication that investors feel a company will improve performance in the future,translating to increased profits.Since P/E ratios can vary across industries,the relative magnitude of a particular P/E ratio is best determined by comparing a firm's P/E to its own in the past or to peer companies in the same industry.

Generally,a Relatively High P/E Ratio Indicates