Which financial indicator is calculated by the ratio of market price per share to earnings per share?
A) return on investment
B) price/earnings ratio
C) return on equity
D) dividend yield on common stock
E) dividend payout ratio

Question

Quizplus · Accepted Answer

The price/earnings (P/E) ratio is calculated by dividing the market price per share by the earnings per share. It is a commonly used financial indicator to determine the valuation of a company's stock. A higher P/E ratio indicates that investors are willing to pay more for each dollar of earnings, while a lower P/E ratio suggests that investors are not willing to pay as much for each dollar of earnings.

Which Financial Indicator Is Calculated by the Ratio of Market