Asked by Rachel Osorio on May 13, 2024
Verified
The price-earnings ratio on common stock is calculated as
A) market price per share of common stock, divided by earnings per share on common stock
B) earnings per share of common stock, divided by market price per share of common stock
C) market price per share of common stock, divided by dividends per share of common stock
D) dividends per share of common stock, divided by earnings per share on common stock
Price-Earnings Ratio
A financial metric that evaluates the market value of a stock relative to its earnings, indicating investor expectations.
Market Price
The current value at which an asset or service can be bought or sold.
Earnings Per Share
A company's profit divided by the outstanding shares of its common stock, indicating the company's profitability.
- Attain proficiency in the evaluation and comprehension of various financial indicators.
Verified Answer
FJ
Fanta JawaraMay 13, 2024
Final Answer :
A
Explanation :
The price-earnings ratio on common stock is calculated by dividing the market price per share of common stock by earnings per share on common stock. This ratio helps to evaluate the relative value of a company's stock by comparing its current market price to its earnings per share.
Learning Objectives
- Attain proficiency in the evaluation and comprehension of various financial indicators.