Chapter_18

Whenafirmispublichoweveritis

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Unformatted text preview: y depth to the market for your stock. Also, stocks you may not be able to “margin” stocks that sell for less than $5 – thus hurting demand. Conversely, if you have earnings that are so high that your stock sells for, say, over $75/share, you will be hurting the market for your stock. For optimum P/E, it is suggested that your stock sell somewhere in a “usual range”, e.g.., $20­75. MANAGING THE MULTIPLIER MANAGING THE MULTIPLIER y MANAGEMENT: We have already looked at this factor, so there is not much need to revisit it here. When a firm is public, however, it is possible for a firm’s management to visit Financial Analysts meetings. This is a chance to impress these analysts (opinion makers) with how professional the management team is. VALUATION VALUATION y STATE OF THE STOCK MARKET: It is important for management to be aware of the state of the stock market ­ and, in particular, its industry segment ­ in order to know when the stock is “high” just because the “market is high (low)”. Taking actions when the market is down is like swimming against the current. If the market for your stock is really down, maybe it would be a good time to take a "Financial bath”. If the market for your stock is really “high”, maybe it is time to issue more stock or to use the stock for an ac...
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