Identifying Price Multiples in Equity Valuation

In financial analysis, equity valuation techniques help investors determine the value of a company's stock. One commonly used method for evaluating a company's stock is through price multiples. Price multiples are ratios that relate the price of a stock to some measure of financial performance or a fundamental characteristic of the company.

Consider the following statements about price multiples:

Which of the following is a commonly used price multiple that compares a company's current share price to its earnings per share (EPS)?