Question
Note the following definitions: -'Price' is the firm's share price; -'Earnings' is the firm's total earnings; -'Shares' is the total number of shares; -'EPS' is
Note the following definitions:
-'Price' is the firm's share price;
-'Earnings' is the firm's total earnings;
-'Shares' is the total number of shares;
-'EPS' is earnings per share, which equals total earnings divided by total number of shares;
-'Market cap' is the equity market capitalisation, which equals share price multiplied by the total number of shares.
Finance terminology is often inexact. The PE or 'price to earnings' ratio would be more accurately named if it was called the:
Select one:
a.Earnings to EPS ratio.
b.Market cap to shares ratio.
c.Market cap to earnings ratio.
d.EPS to shares ratio.
e.Price to shares ratio.
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