The correct answer is A. price earning ratio.
Price-to-earnings ratio (P/E ratio) is a valuation ratio that compares a company’s stock price to its earnings per share (EPS). It is calculated by dividing the market price per share (P) by the earnings per share (E). A high P/E ratio indicates that investors are willing to pay a high price for a company’s stock, relative to its earnings. A low P/E ratio indicates that investors are not willing to pay a high price for a company’s stock, relative to its earnings.
Earnings per share (EPS) is a measure of a company’s profitability. It is calculated by dividing a company’s net income by the number of shares outstanding. EPS is used to compare the profitability of different companies. A high EPS indicates that a company is profitable, while a low EPS indicates that a company is not profitable.
The P/E ratio is a popular valuation ratio because it is easy to calculate and understand. However, it is important to note that the P/E ratio is only one measure of a company’s value. Other factors, such as a company’s growth rate and risk profile, should also be considered when evaluating a company’s stock.