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What does the Price to Earnings (P/E) ratio demonstrate?

 

• The price of the company's products relative to how much they earn on the sale of those products

 

• A company's stock price relative to its earnings. Higher growth companies have higher P/E ratios

 

• The prices paid for goods relative to how much the company earns on those goods

 

• The ability of a company to pay dividends

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تم إضافة السؤال من قبل Shazia Anees , Assistant Manager Finance , Arham Trading Company
تاريخ النشر: 2015/05/22
Shahbaz Hayder
من قبل Shahbaz Hayder , Group Head of Finance , Sharif Group of Companies

Option2 is the right answer.

Munavar Pk
من قبل Munavar Pk , ACCOUNTANT , PIPE INDIA ENTERPRISES

I THINK IT'S ANSWER IS "B"

   BECAUSE P/E RATIO IS RELATING WITH STOCK WITH RESPECT OF ITS MARKET PRICE.

MOSTLY THIS RATIO IS USING INVESTORS.

 ITS EASILY TO UNDERSTAND OR ANALYZE HOW MUCH THEY PAY FOR A STOCK BASED ON ITS CURRENT RATIO

 

 (ITS MY OPINION) THANK YOU

Mohamed Abdelrahman
من قبل Mohamed Abdelrahman , Senior Accountant , Msafat Company

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....................

Ahmed kandil
من قبل Ahmed kandil , Cost Controller , Battour Holding Cpompany

Answer ( B ) is the correct answer Thank you

Abbas  Bharmal CA Inter M com Looking for New
من قبل Abbas Bharmal CA Inter M com Looking for New , Senior Accountant , Msheireb Properties

Option2 is the correct answer...........

Mudassar Mudassar
من قبل Mudassar Mudassar , Proprietor , S & M Tax Accountants

A company's stock price relative to its earnings. Higher growth companies have higher P/E ratios.

P/E Ratio determines the decision of investors about how much they can earn against the price paid by them against purchase of shares of such company.

Farrukh Saeed Baig
من قبل Farrukh Saeed Baig , Finance Manager , Taazor Capital Property LLC

Option2 is correct

it is common practice for investors to use the price-to-earnings ratio (P/E ratio or price multiple) to determine if a company's stock price is over or undervalued. Companies with a high P/E ratio are typically growth stocks.

Osama Alia
من قبل Osama Alia , Freelance consultation (Financial Management, Banking) , Freelance CFO

Option B demonstrate the right answer.

Mohammed Talal Hijazi
من قبل Mohammed Talal Hijazi , Chief Financial Officer , Umbria Holdings

It is the price you pay for every dollar of earning. For example if a company has earnings of10 dollars (per share) and the share is traded at30, Then the P/E ratio is3, you would be paying3 dollars for each dollar of earnings.

Gihan Perera
من قبل Gihan Perera , Head Of Finance Department , SIBCO PVT LTD

Performance of shares with respect to the market price, this can consider as investment ratio or performance ratio

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