Question

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

Answer 1

Answer:

correct option is c. 20

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 = $\frac{market\ price}{earning\ per\ share}$    .................................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