Purchase Solution

Reconcile investor expectations: high market/book ratio, low P/E ratio

Not what you're looking for?

Ask Custom Question

How can you reconcile investor expectations for a firm with an above average market/book ratio and a below average P/E ratio? Could the age of a firm have an impact on this comparison? Explain in details.

Purchase this Solution
Solution Summary

The expert examines reconcile investor expectations for high market/book ratio and low P/E ratios.

Solution Preview

ANSWERS

The main factor could be that the company has still to reach its optimal capital structure, hence ...

Purchase this Solution
Free BrainMass Quizzes
SWOT

This quiz will test your understanding of the SWOT analysis, including terms, concepts, uses, advantages, and process.

Marketing Research and Forecasting

The following quiz will assess your ability to identify steps in the marketing research process. Understanding this information will provide fundamental knowledge related to marketing research.

Organizational Leadership Quiz

This quiz prepares a person to do well when it comes to studying organizational leadership in their studies.

MS Word 2010-Tricky Features

These questions are based on features of the previous word versions that were easy to figure out, but now seem more hidden to me.

Operations Management

This quiz tests a student's knowledge about Operations Management

View More Free Quizzes
Related BrainMass Solutions

  • Hills Industries: Company Valuation using Price-Earnings Ratio and Price-Book Value Ratio

    A P/E of 40, would mean that it would take 40 years for the investor to see a return on the investment. High P/E ratios can represent low recent earnings, whilst a low P/E ratio could imply low expectations or that the stock is undervalued.

  • What are ways for valuing stocks?

    Similar returns The firms should have similar expected book returns on owner's equity and expected growth in the owners' equity. For example if one firm has low growth expectations then it will have low P/Es.

  • P/E Ratios and Mark-to-Book Ratios

    Companies with high earnings per share but low net assets value have low P/E ratio and high market to book ratio. D.

  • Common Stock Valuation

    Similar returns The firms should have similar expected book returns on owner's equity and expected growth in the owners' equity. For example if one firm has low growth expectations then it will have low P/Es.

  • Stock Valuation Management Questions

    (Points : 1) I. high P/E ratios II. low debt to equity ratios III. high cash flow relative to price IV. high book value relative to market price I and II only I and III only I, II and IV only

  • Managerial Finance: Finance Department

    Similar returns The firms should have similar expected book returns on owner's equity and expected growth in the owners' equity. For example if one firm has low growth expectations then it will have low P/Es.

  • Financial Systems Focusing on Valuation

    Similar returns The firms should have similar expected book returns on owner's equity and expected growth in the owners' equity. For example if one firm has low growth expectations then it will have low P/Es.

  • What does the price/earnings (P/E) ratio show

    It would not be useful for investors using the P/E ratio as a basis for their investment to compare the P/E of a technology company (high P/E) to a utility company (low P/E) as each industry has much different growth prospects.

  • Public Investing Ratios

    * The P/E ratio is a much better indicator of a stock's value than the market price alone. * P/E ratios are generally lower during times of high inflation. * There are many explanations as to why a company has a low P/E.

View More Related Solutions