Which of the following is NOT a true statement about Price to Earnings ratios?

P/E ratios are useful for comparing companies in the same sector.

P/E compares a company’s market valuation with the income it is actually generating.

Stocks with higher forecast earnings growth will usually have a lower P/E.

With trailing P/E, the earnings per share is based on the most recent 12 month period.

Which of the following is a true statement about using Return on Equity (ROE) to analyze a company?

All of these answers

If a company increases the debt percentage of its capital structure, its ROE will decrease.

If a company’s net margin increases, it results in a lower overall ROE.

ROE measures how efficient the company is at generating profits from the funds invested in it