Which of the following is not true of P/E ratios? a. It is calculated by dividing the stock price by EPS b. It can show whether a stock is under or overvalued c. Can be used to compare similar companies but not companies from different industries d. All of the above are true. e. None of the above are true.

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Clare

Business

11 November, 17:05

Which of the following is not true of P/E ratios? a. It is calculated by dividing the stock price by EPS b. It can show whether a stock is under or overvalued c. Can be used to compare similar companies but not companies from different industries d. All of the above are true. e. None of the above are true.

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Lorenzo Oconnor · Answer 1

Answer: The correct answer is "d. All of the above are true."

Explanation: All of these statements are true.

a. It is calculated by dividing the stock price by EPS

b. It can show whether a stock is under or overvalued

c. Can be used to compare similar companies but not companies from different industries

The price-benefit ratio, or P/E is a financial ratio that compares the price of a share with the profit per share of a company.

That is, the PER ratio tells us how much investors are willing to pay for each euro of profit. It is also known as P / E.

The PER is one of the most used financial ratios in the fundamental analysis. It tells us if a company's stock is overvalued or undervalued, because it tells us if the price of a stock has gone up or down a lot with respect to the company's profits.