What Are the Implications for the Usefulness of the P/E

question 64

Essay

What are the implications for the usefulness of the P/E ratio if a company's earnings are very low (like a few cents)or negative?

---

Definitions:

Dichotomy

A division or contrast between two things that are represented as being entirely different.

Analogy

A comparison between two things, typically for the purpose of explanation or clarification, highlighting similarities in some respects.

False Dichotomy

A logical fallacy that presents two opposing options as the only possibilities, when in fact more options exist.

Weak Analogy

An argument based on insufficient parallels between two or more entities, which may lead to faulty conclusions.