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Pitfalls and Problems with the PE Ratio

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Which of the following statements is/are potential problems or pitfalls with using the price/earnings ratio? Select all that apply.

A

The price/earnings ratio is negative when a company posts net losses.

B

A low price/earnings ratio can provide differing conclusions about a company—either that the company is undervalued or that the company is doing well compared to past trends.

C

The price/earnings ratio will always provide an accurate assessment of the stock's performance.

D

Various other facts and metrics can skew the price/earnings ratio.