Which one of the following statements is true concerning the priceearnings (PE) ratio?
Which one of the following statements is true concerning the priceearnings
(PE) ratio?
a. A high PE ratio may indicate that a firm is expected to grow
significantly.
b. A PE ratio of 16 indicates that investors are willing to pay
$1 for every $16 of current earnings.
c. PE ratios are unaffected by the accounting methods employed by
a firm.
d. The PE ratio is classified as a profitability ratio.
e. The PE ratio is a constant value for each firm.
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