Which One of the Following Is a Limitation of the P/E

question 100

Multiple Choice

Which one of the following is a limitation of the P/E ratio?

• A) Easy way to estimate the price of a firm
• B) It compares the performance of stocks
• C) Ignores the magnitude or the sign of the earnings
• D) One of the most widely used relative pricing methods

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Definitions:

Human Relations Skills

Abilities essential for effective interpersonal interactions, such as communication and empathy, that contribute to successful teamwork and leadership.

Influence

The capacity or power to affect someone's beliefs, actions, or decisions.

Debt-to-Income Ratio

A personal finance measure comparing an individual's debt payments to his or her gross income.

Liabilities

A person’s debts or amount that is owed.