The Price-Earnings Ratio Indicates What Multiple of Current Earnings Investors

question 115

True/False

The price-earnings ratio indicates what multiple of current earnings investors are willing to pay for a share of stock.

---

Definitions:

Direct Fixed Manufacturing Costs

Fixed costs directly associated with the manufacturing process, such as salaries of production supervisors.

Discontinue

The process of ending the production and sale of a product or service, often due to strategic reevaluation or lack of success.

Purchasing Per Unit

The cost associated with buying an individual unit of product or material.

Relevant Costs

Costs that should be considered when making business decisions because they are future costs that differ between alternatives.