Asked by Prutha Patel on Jun 13, 2024
Verified
The price-earnings ratio is computed by dividing the current market price per share by the current earnings per share.
Price-Earnings Ratio
The price-earnings ratio (P/E ratio) measures a company's current share price relative to its per-share earnings, indicating the value that investors place on a company's earning power.
- Understand the significance of the price-earnings ratio and what it indicates about market perception.
Verified Answer
IQ
Ismael QuilesJun 18, 2024
Final Answer :
True
Explanation :
The price-earnings (P/E) ratio is indeed calculated by dividing the market price per share of a company's stock by its earnings per share (EPS). This metric is used to evaluate the relative value of a company's shares in the context of its earnings.
Learning Objectives
- Understand the significance of the price-earnings ratio and what it indicates about market perception.
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