Discuss the Term Price-Earnings (P/E)ratio

question 34

Essay

Discuss the term price-earnings (P/E)ratio.

---

Definitions:

Close Substitutes

Close substitutes are different goods or services that can satisfy the same needs or desires, often with very little difference from the consumer's perspective.

Silk-Screened T-Shirts

T-shirts printed using a technique that forces ink through a mesh screen to create a design.

Long Run

A period in which all factors of production and costs are variable, allowing all inputs to be adjusted to meet changes in the market.

Zero Economic Profit

Occurs when a firm's total revenues are exactly equal to its total costs, including both explicit and implicit costs, indicating no abnormal profit above the normal rate of return.