Limited access

Upgrade to access all content for this subject

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


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


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.


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


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

Select an assignment template