The price/earnings ratio indicates
A)the amount of earnings that a company is willing to pay to shareholders in the form of dividends.
B)what multiple of current earnings investors are willing to pay for a share of stock.
C)the net income available to pay out in dividends to shareholders.
D)the amount of earnings in relation to total assets.

Question

Quizplus · Accepted Answer

The price/earnings ratio (P/E ratio) is a valuation metric that compares a company's current share price to its earnings per share (EPS). It reflects the multiple of current earnings that investors are willing to pay for a single share of a company's stock. A higher P/E ratio suggests higher expectations for future growth and profitability, while a lower P/E ratio implies a lower expectation for future growth.

The Price/earnings Ratio Indicates