Which of the following statements about the price/earnings ratio is false?
A. The price/earnings ratio is a constant relationship for most companies.
B. A high price/earnings ratio indicates investors have high confidence in the future potential of the company.
C. It is more useful to compare a company's price/earnings ratio to a competitor's ratio or the industry average ratio.
D. The price/earnings ratio is computed by dividing the market price of stock by the earnings per share