Which one of the following statements is true concerning the priceearnings (PE) ratio?

Which one of the following statements is true concerning the priceearnings

(PE) ratio?

a. A high PE ratio may indicate that a firm is expected to grow

significantly.

b. A PE ratio of 16 indicates that investors are willing to pay

$1 for every $16 of current earnings.

c. PE ratios are unaffected by the accounting methods employed by

a firm.

d. The PE ratio is classified as a profitability ratio.

e. The PE ratio is a constant value for each firm.

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