What Is the Formula to Calculate P/E Ratio

question 16

Multiple Choice

What is the formula to calculate P/E ratio?

• A) Market price per share ÷ Book value per share
• B) Earnings available to common stockholders (EAC) ÷ Number of shares
• C) Common dividends ÷ Number of shares
• D) Market price per share ÷ Earnings per share
• E) Average cost of funds × Invested capital

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Definitions:

Absolute Sureties

Individuals or entities that guarantee the performance of a debtor or contractual obligations without any conditions.

Financing Statement

A document filed by a creditor to indicate a security interest in the assets of a debtor, typically used in secured transactions.

Trade Name

The commercial name under which a business operates and is known to the public, distinct from the business's legal name.

Collateral

An asset pledged by a borrower to secure a loan, which can be seized by the lender if the loan is defaulted on.