Comparison of the market price of the share with the earnings per share gives us which ratio?a.Interest coverb.Dividend yieldc.Price/Earnings ratiod.IPO

Break Down the Problem

1. Identify the Key Terms: The question asks for the ratio that compares the market price of a share with the earnings per share (EPS).
2. Review Options: We have four options to consider: Interest cover, Dividend yield, Price/Earnings ratio, and IPO.
3. Define the Relevant Concepts: We will focus on the definitions of each option to identify which one fits the question.

Relevant Concepts

1. Interest Cover: This ratio measures a company's ability to pay interest on its outstanding debt.
2. Dividend Yield: This ratio indicates how much a company pays out in dividends each year relative to its share price.
3. Price/Earnings (P/E) Ratio: This is calculated as the market price per share divided by the earnings per share (EPS). It indicates the market's expectations of a company's future financial performance.
4. IPO (Initial Public Offering): This refers to the process of offering shares of a private corporation to the public in a new stock issuance.

Analysis and Detail

• Among the provided options, the Price/Earnings (P/E) ratio specifically represents the relationship between market price per share and earnings per share, which is precisely what the question describes.
• The formula for the Price/Earnings ratio is: $\text{P/E Ratio} = \frac{\text{Market Price per Share}}{\text{Earnings per Share}}$
• The other options do not relate to this specific comparison.

Verify and Summarize

• After analyzing each of the ratios, it is confirmed that the only ratio that compares the market price of a share and the earnings per share is the Price/Earnings (P/E) ratio.
• Other choices, such as Interest cover, Dividend yield, and IPO, do not pertain to the comparison mentioned in the question.

Final Answer

The correct ratio that compares the market price of the share with the earnings per share is c. Price/Earnings ratio.