Register
A lower than average PE may mean that the market expects earnings to rise in the future. True / False.
33.9k views
2 votes
A lower than average PE may mean that the market expects earnings to rise in the future.

True / False.

User Johnny Alpha
by
5.3k points

1 Answer

4 votes

Answer:

False

Step-by-step explanation:

PE ratio is used to determine what investors are willing to pay to receive one dollar of a company's earnings. This price they are willing to pay is based on past and expected future earnings. It is calculated by dividing the market price per share by the earnings per share. A higher average PE means that investors are expecting earnings growth to be higher whereas a lower PE means that they are expecting the future earnings to decrease.

User Rosaria
by
5.8k points
Ask a Question
Welcome to QAmmunity.org, where you can ask questions and receive answers from other members of our community.

6.2m questions

8.2m answers

Other Questions

Why do objects used as money need to be in limited supply
When a producer owns an intermediary at the next level down in the marketing channel, it is referred to as _________. a. forward integration b. backward integration c. vertical channel connection d. horizontal
Which organizational behavior perspective discusses inputs, outputs, and feedback? A. Organizational learning B. Open systems C. Multidisciplinary D. Systematic research E. Intellectual capital
Which of the following is not how a pro forma financial statement is used A. to analyze the effects of the firms forecasts on its financial performance B. to determine the amount of money needed for a
For Frank’s Funky Sounds, straight-line depreciation on the trucks is a a. variable cost. b. fixed cost. c. mixed cost. d. high-low cost.
Link Copied!