Asked by Mohamed Araye on May 03, 2024
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The price-earnings ratio is determined by dividing market price per share of stock by the earnings per share.
Price-Earnings Ratio
A valuation ratio of a company's current share price compared to its per-share earnings, used to evaluate a company's financial health and potential growth.
Market Price
The current price at which an asset or service can be bought or sold in a marketplace.
Earnings Per Share
A measure of a company's profitability, calculated by dividing the company's net income by the number of its outstanding shares.
- Understand the connection between market valuations such as the price-earnings ratio and fundamental financial performance indicators.
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Learning Objectives
- Understand the connection between market valuations such as the price-earnings ratio and fundamental financial performance indicators.
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