The price/earnings (P/E) ratio represents the degree of confidence that investors have in a firm's future performance.

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The P/E ratio is a measure of the current stock price relative to its per-share earnings. It is widely used to determine the valuation of a company's stock and can suggest the degree of confidence investors have in a firm's future performance. Generally, a higher P/E ratio indicates that investors expect higher earnings growth from the company in the future and are willing to pay a premium for the stock.

The Price/earnings (P/E) Ratio Represents the Degree of Confidence That