Which profitability ratio requires the use of earnings per share and the current market price?
A)Return on common stockholders' equity
B)Dividend payout ratio
C)Dividend yield ratio
D)Price/earnings ratio

Question

Quizplus · Accepted Answer

The price/earnings ratio (P/E ratio) requires the use of both earnings per share and the current market price. It is calculated by dividing the current market price per share by the earnings per share. The P/E ratio is used to measure the market's assessment of a company's future earnings potential and is commonly used for stock valuation.

Which Profitability Ratio Requires the Use of Earnings Per Share