When earnings are volatile, the ratio can be useful in evaluating a company because ...

Question

Question

When earnings are volatile, the ________ ratio can be useful in evaluating a company because ________ value is generally more stable than net income.

A. Price-to-Book; book

B. Price-to-Earnings; book

C. Price-to-Earnings; market

D. Price-to-Book; market

Answer 1

Answer #1

Answer

Correct option is. - C

Price to earning ,. Market

Explanation

PE ratio = earning per share / market price per share

When the earning are changing PE ratio is useful of because evaluation of company as market value is more stable then the net income

Book value per share is always constant the market value is changing based on market changes and company performance

Thank you

Hope you understand

Please be comment if you have any doubt in it

Answer 2

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