The _______ is an indicator of investors' evaluation of a company's future earnings potential.

Question

Quizplus · Accepted Answer

The price/earnings ratio (P/E ratio) is a measure of how much investors are willing to pay per share for a company's earnings. It is calculated by dividing the current market price per share by the earnings per share. A high P/E ratio suggests that investors have high expectations for a company's future earnings potential, while a low P/E ratio suggests low expectations.

The _______ Is an Indicator of Investors' Evaluation of a Company's