?

Corporate Finance

Free Version

Upgrade subject to access all content

Easy

Limitations of the PE Ratio

CORPFN-XB9MJJ

Which of the following is/are limitations of the price/earnings ratio? Select all that apply.

A

The price/earnings ratio standardizes the value of one dollar of earnings.

B

Price/earnings ratios vary widely between various industries and sectors, and therefore limits their use as a device for comparison.

C

Debt, leverage, and earnings can skew the price/earnings ratio.

D

Inaccurate inputs can skew the ratio.