Question

income before amortization and taxes plus taxes. income before amortization and taxes plus amortization income after taxes minus amortization QUESTION 52 What is the P/E ratio? Why is it an important ratio? List 1 factor that influences the value of the PVE ratio T T T Arial 3(12pt) T. . Words Path: Click Save and Submit to save and submit. Click Save All Answers to save all answers. Save As Answe

Answer 1

P/E ratio is a valuation ratio. P/E means price to earnings ratio that is equal to (Price per share)/(Earnings per share)

P/E ratio is important because, it is used to compare a company with its peer companies (and industry average P/E ratio). Companies with lower P/E value are considered to be undervalued and better investments

Factors influencing P/E ratio:
P/E=(Price per share)/(Earnings per share)
=(Price per share)/(Net income/Number of shares outstanding)

P/E ratios are affected by the share prices, net income and shaares outstanding