The price per share divided by earnings per share is the formula for calculating ___________?
Correct answer: A. price earnings ratio
- A. price earnings ratio
- B. earnings price ratio
- C. pricing ratio
- D. earnings ratio
Explanation
Price per share divided by earnings per share shows how many times investors are paying the company’s current earnings, which is the price-earnings ratio. Reversing the formula would produce the earnings-price ratio.
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About Business Finance
Business finance explains how organisations plan, obtain and use money while balancing risk, return and liquidity. Topics include financial statements, time value of money, budgeting, working capital, capital structure, sources of finance, investment appraisal and cost of capital. Capital budgeting evaluates long-term projects, whereas working capital manages day-to-day operations.
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