Investors can make reasonable estimates of a business unit's potential independent value by using ________ ratios.
A) revenue to cost
B) price to earnings
C) human resource costs to price
D) price to cost

Question

Quizplus · Accepted Answer

Price to earnings ratios compare a company's stock price to its earnings per share, providing insights into how much investors are willing to pay for each dollar of earnings. This can give investors an idea of the value of a business unit within a larger company, as well as its potential for growth and profitability. Revenue to cost, human resource costs to price, and price to cost ratios are not commonly used for this purpose.

Investors Can Make Reasonable Estimates of a Business Unit's Potential