Table of contents

1. Introduction to Accounting1h 21m
2. Transaction Analysis1h 13m
3. Accrual Accounting Concepts2h 38m
4. Merchandising Operations2h 30m
5. Inventory1h 55m
6. Internal Controls and Reporting Cash1h 16m
7. Receivables and Investments3h 8m
8. Long Lived Assets5h 1m
9. Current Liabilities2h 19m
10. Time Value of Money1h 23m
- Time Value of Money Equations
  35m
- Using Time Value of Money Tables
  47m
11. Long Term Liabilities2h 45m
12. Stockholders' Equity2h 15m
13. Statement of Cash Flows2h 24m
14. Financial Statement Analysis5h 25m
15. GAAP vs IFRS56m

14. Financial Statement Analysis

Ratios: Earnings Per Share (EPS)

Financial Accounting

14. Financial Statement Analysis

Ratios: Earnings Per Share (EPS)

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Multiple Choice

Which financial ratio is calculated by dividing the market price per common share by earnings per share (EPS)?

Return on Equity (ROE)

Earnings Per Share (EPS)

Price-Earnings (P/E) Ratio

Dividend Yield

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Verified step by step guidance

Step 1: Understand the question. The problem is asking for the financial ratio that is calculated by dividing the market price per common share by earnings per share (EPS).

Step 2: Recall the formula for the Price-Earnings (P/E) Ratio. The P/E Ratio is defined as:

\frac{Market Price per Share}{Earnings Per Share (EPS)}

Step 3: Compare the given options. Return on Equity (ROE) measures profitability relative to shareholders' equity, Earnings Per Share (EPS) is a measure of profitability per share, and Dividend Yield measures the dividend income relative to the market price. None of these match the formula provided.

Step 4: Identify the correct answer. The Price-Earnings (P/E) Ratio is the financial ratio that matches the formula provided in the question.

Step 5: Conclude that the correct answer is Price-Earnings (P/E) Ratio, as it is calculated by dividing the market price per common share by earnings per share (EPS).