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It depends on the industry, but in general, Investors should have strong confidence in a firm’s outlook and earnings growth if the Price-to-Earnings Ratio is over ___.

a. 12
b. 10
c. 20
d. 5

User Joe Riggs
by
7.8k points

1 Answer

3 votes

Answer:

correct option is c. 20

Step-by-step explanation:

Price-to-Earnings Ratio is over 20 time

as Price-to-earnings ratio is define as that ratio in which develop a relationship between per share earning and the market price

and we get ratio by this formula that is

Price-to-Earnings ratio =
(market\ price)/(earning\ per\ share) .................................1

and here we considered as very good ratio is more than 20 time as Higher is Price-to-Earnings ratio will be good for equity shareholder

so here correct option is c. 20

User Tomasz Bartnik
by
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