Financial statements and ratio analysis - Market Ratios
3 important questions on Financial statements and ratio analysis - Market Ratios
What does the P/E ratio measure?
the amount that investors are willing to pay fore ach dollar of a firm's earnings
The higher the P/E ratio, the....
greater the investor confidence
What do you calculate with the market/book ratio?
provides an assessment of how investors view the firm's performance. firms expected to earn high returns relative to their risk typically sell at higher M/B multiples.
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