Which of the following ratios indicate how much investors are willing to pay for a firm's stock for each dollar of reported profits?
A)Earnings per share
B)Market-to-book ratio
C)Price/earnings ratio
D)Return on equity
E)Net profit margin

Question

Quizplus · Accepted Answer

The price/earnings ratio (P/E ratio) is the ratio of a company's share price to its earnings per share. It indicates how much investors are willing to pay for each dollar of reported profits. A higher P/E ratio suggests that investors have higher expectations for future earnings growth.

Which of the Following Ratios Indicate How Much Investors Are