The P/E ratio measures the ________.

Question

Quizplus · Accepted Answer

The P/E (price-to-earnings) ratio measures the market value of the stock relative to earnings per share. It is calculated by dividing the current market price of a share by its earnings per share (EPS) over the last 12 months. A high P/E ratio may indicate that investors are optimistic about the future earnings potential of the company, while a low P/E ratio may suggest that the market has lower expectations for the company’s future earnings.

The P/E Ratio Measures the ________