Which of the following ratios usually reflects investor's opinions of the future prospects for the firm?

Question

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The price/earnings (P/E) ratio reflects investors' opinions of the future prospects for the firm as it indicates how much investors are willing to pay for each dollar of earnings per share. A high P/E ratio implies that investors are optimistic about the company's future earnings growth potential. On the other hand, a low P/E ratio may indicate that investors have less confidence in the company's future growth prospects. Earnings per share (A) and book value per share (D) provide information about a company's current financial performance and asset value, respectively. Dividend yield (B) reflects how much cash a company pays out to investors in the form of dividends relative to its share price, but it does not necessarily indicate future growth prospects.

Which of the Following Ratios Usually Reflects Investor's Opinions of the Future