Price-earnings (P/E) ratio is influenced by all of the following BUT

Question

Quizplus · Accepted Answer

The P/E ratio is directly influenced by earnings per share (B) as it is a component of the ratio itself. Business risk (A) and quality of management (C) indirectly affect the P/E ratio through their impact on the company's future earnings potential and investor perception, but they are not direct components of the P/E ratio calculation. Therefore, all the options listed do influence the P/E ratio in some manner.

Price-Earnings (P/E) Ratio Is Influenced by All of the Following