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Unformatted text preview: per share = N = =
Pr ice P0 Ratio = Cash Flow Cash Flow per share = =
25 25 Market to Book (M/B) Ratio Market to Book (M/B) Ratio P M /B= BV ps P = Shareholders ' Equity N 26 26 The higher the value of M/B, the greater the esteem investors have of the firm Common Equity E Book Value per Share = = N N 1,552 = 250 = $6.21 Market Price per share Market − to − Book Ratio = Book Value per Share P0 = MV PBV = =
27 27 Book-to-Market Ratio
This ratio is the inverse of the Markettobook ratio The M/B ratio tends to be favoured by US researchers. The lower the value of the B/M ratio, the more value investors put on the firm: • M should _________________________
Think back to finance’s “Objective Function” 28 28 Book-to-Market Ratio
Book Value per Share M...
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This note was uploaded on 12/23/2009 for the course BCOM FINC 202 taught by Professor Warwickanderson during the Spring '09 term at Canterbury.
- Spring '09