The P/E ratio is calculated by dividing
A) the current stock price by stockholders' equity.
B) total assets by net income.
C) the current stock price by earnings per share.
D) the current stock price by operating cash flow per share.

Question

Quizplus · Accepted Answer

The P/E (Price-to-Earnings) ratio is calculated by dividing the current stock price by earnings per share, which represents the amount of earnings attributable to each share of stock. This ratio is commonly used to evaluate the valuation of a company's stock and how much investors are willing to pay for each dollar of earnings. Options A, B, and D do not accurately reflect the calculation of the P/E ratio.

The P/E Ratio Is Calculated by Dividing