Which ratio identifies the amount shareholders are willing to pay for each $1 per share of earnings a firm generates?
A)Equity multiplier
B)Return on equity
C)Price-earnings ratio
D)DuPont identity
E)Return on assets

Question

Quizplus · Accepted Answer

The price-earnings ratio (P/E ratio) identifies the amount shareholders are willing to pay for each $1 per share of earnings a firm generates. It is calculated by dividing the current market price per share by the earnings per share (EPS) over the last 12 months.

Which Ratio Identifies the Amount Shareholders Are Willing to Pay