The price/earnings ratio is the market price of one share of a company's stock divided by its earnings per share. If earnings per share decreases, the price/earnings ratio will increase, not decrease. The price/earnings ratio is the market price of one share of a company's stock divided by its earnings per share. If the market price of the stock rises, the price/earnings ratio will increase, not decrease. The price/earnings ratio is the market price of one share of a company's stock divided by its earnings per share. If earnings per share (the denominator) increases while the market price (the numerator) stays the same, the price/earnings ratio will decrease. The price/earnings ratio is the market price of one share of a company's stock divided by its earnings per share. If both earnings per share and the market price of the stock rise, the direction of the change in the price/earnings ratio cannot be determined, because it would depend on which rose more.
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