Two companies that operate in the same industry have different Price/Earnings (P/E) ratios as follows:    Which...

A higher P/E ratio usually reflects higher expected future growth and/or lower perceived risk. Among the options, only higher expected growth explains why Company B’s P/E (15) is greater than Company A’s (8). Higher risk or higher gearing would normally reduce the P/E, not increase it, and current profit level alone doesn’t determine the multiple.

✅ Answer: C. Company B has higher expected future growth than Company A.