The measurement that best reflects investors' expectations about future earnings is:
A)Earnings per share.
B)Return on assets.
C)The price-earnings ratio.
D)Return on equity.

Question

Quizplus · Accepted Answer

The price-earnings ratio (P/E ratio) is the ratio of a company's stock price to its earnings per share (EPS). This measurement reflects investors' expectations about future earnings because it indicates how much investors are willing to pay per dollar of earnings. A higher P/E ratio may indicate that investors expect higher future earnings, while a lower P/E ratio may indicate lower expectations for future earnings. Therefore, the P/E ratio is a key measurement for investors to consider when analyzing a company's potential for future growth and profitability.

The Measurement That Best Reflects Investors' Expectations About Future Earnings