If Squid Roe Company's P/E ratio is 12,which of the following statements is correct?
A)Investors are willing to pay 12 times the current year's earnings per share of stock.
B)Squid Roe's stockholders earned 12 times the owners' average investment.
C)Squid Roe's average stockholders' equity is 12 times its earnings.
D)Squid Roe's net income was 12 times its stockholders' equity.

Question

Quizplus · Accepted Answer

The P/E ratio measures how many times more than current year's earnings investors are willing to pay for a company's stock.Since its P/E ratio is 12,investors are willing to pay 12 times the current year's earnings per share of stock.

If Squid Roe Company's P/E Ratio Is 12,which of the Following