What does earning yield measure regarding a business?

Earnings yield is a financial metric that focuses on the profitability of a company expressed relative to its current share price. Specifically, it is calculated by taking the earnings per share (EPS) and dividing it by the market price per share, yielding a ratio that indicates how much an investor earns in relation to the cost of acquiring a share.

When considering the various aspects of a business's financial performance, the earning yield effectively provides insight into how well the company is generating profit relative to the price investors are paying for the shares. This allows investors to assess the company's profitability performance based on its total profits compared to its market valuation.

In essence, a higher earnings yield can suggest that a company is generating more profit per dollar invested, making it a useful measure for evaluating the performance of a business in relation to its market price. This is why statement B is correct—it accurately captures the essence of what earning yield measures regarding a business.

The other options do not precisely reflect the meaning of earnings yield. While profitability per share issued, market capitalization growth, and return on shareholder equity may highlight different aspects of a company’s financial health, they do not specifically pertain to the relationship between earnings and share price as earning yield does. This focus on the earnings generated in