Asked by gillian williams on Jun 30, 2024
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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 valuation ratio of a company's current share price compared to its per-share earnings.
Market Price
The present rate at which a service or asset is available for purchase or sale on the public market.
Earnings Per Share
A key financial indicator that quantifies a company's net profit divided by the number of common shares it has outstanding.
- Calculate and understand financial ratios such as price-earnings ratio, return on stockholders' equity, and return on total assets.
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Learning Objectives
- Calculate and understand financial ratios such as price-earnings ratio, return on stockholders' equity, and return on total assets.
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