CFA Practice Question
If two stocks (A and B) have the same positive P/E, and stock A has a lower P/S, we can conclude that:
A. A has a higher net profit margin.
B. B has a higher net profit margin.
C. We cannot conclude anything as P/S and P/E are unrelated.
Explanation: Net profit margin = E/S = (P/S) / (P/E).
User Contributed Comments 1
| User | Comment |
|---|---|
| cminor | Member that justified P/S is just Profit Margin x justified P/E |