This refers to the relationship between a company`s stock price and earnings per share.a.Liquidity Ratiob.Price-Earnings Ratioc.Solvency Ratiod.Acid Test Ratio

The question is asking about the relationship between a company's stock price and its earnings per share (EPS). The term that specifically describes this relationship is the "Price-Earnings Ratio" (b).

Here's a brief explanation of each option to clarify why (b) is the correct answer:

1. Liquidity Ratio: This measures a company's ability to meet its short-term obligations. It does not directly relate to stock price and EPS.

2. Price-Earnings Ratio (P/E Ratio): This is the ratio of a company's current share price to its earnings per share. It is used by investors to evaluate a company's relative value and to compare it with other companies in the same industry. This is the correct answer.

3. Solvency Ratio: This measures a company's ability to meet its long-term debts. While important for financial health, it doesn't directly connect stock price and EPS.

4. Acid Test Ratio: This is a stringent measure of liquidity that indicates whether a firm has enough short-term assets to cover its immediate liabilities. Like the liquidity ratio, it does not relate to stock price and EPS.

In summary, the Price-Earnings Ratio is the relevant term as it directly compares stock price with earnings per share.