In computing the price-earnings ratio, the current per share market price of the firm's common stock is divided by the:
A) Par value per common share
B) Dividends per common share
C) Earnings per common share
D) Net income for the year

Question

Quizplus · Accepted Answer

The price-earnings ratio is calculated by dividing the current market price per share of the company's stock by its earnings per share (EPS). This ratio provides an indication of the market's expectations of a company's growth and profitability.

In Computing the Price-Earnings Ratio, the Current Per Share Market