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reeka dongol
on Nov 08, 2024

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Last year, New Flying Industries had a price-earnings ratio of 15. This year, the price earnings ratio is 18. Based on this information, it can be stated with certainty that:

A) The price per share increased.
B) The earnings per share decreased.
C) Investors are paying a higher price for each share of stock purchased.
D) Investors are receiving a higher rate of return this year.
E) Either the price per share, the earnings per share, or both changed.

Price-Earnings Ratio

The Price-Earnings Ratio (P/E ratio) is a financial metric that measures a company's current share price relative to its per-share earnings, used to evaluate its value.

Earnings Per Share

A metric that calculates the portion of a company's profit allocated to each outstanding share of common stock, indicating the company's profitability.

Price Per Share

The current market price of a company's share, reflecting what investors are willing to pay for one share of the company's stock.

  • Understand the relevance of variations in financial ratios across periods and how they affect the valuation of firms.
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KM
Kimpton MachipisaNov 15, 2024
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