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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Brooke ReneeMay 09, 2024
Final Answer :
True
Explanation :
This is the correct formula for calculating price-earnings ratio (P/E ratio).