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The p/e ratio can be interpreted as ""the number of years’ earnings to pay back purchase price"" True or False
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The p/e ratio can be interpreted as ""the number of years’ earnings to pay back purchase price"" True or False

User Jonathon Reinhart
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4 votes

Answer:

True

Step-by-step explanation:

P/E ratio is the price to earning ratio. Investor look into this ratio before investing or buying share of the company as it shows the market value of the shares or demand of the shares in the market. If ratio is higher then investor anticipate the growth of the company´s earning in the future, it also show investors are willing to pay higher price for each dollar earning of the company.

Price earning ratio=
(market\ value\ price\ per\ share)/(earning\ per\ share)

User Darren Oakey
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