How can you reconcile investor expectations for a firm with an above-average M/B ratio and a below-average P/E ratio? Could the age of the firm have any effect on this ratio comparison?
Answer to relevant QuestionsHow are corporations taxed on ordinary income? What is the difference between the average tax rate and the marginal tax rate on ordinary corporate income? What is operating cash flow (OCF)? What is free cash flow (FCF), and how is it related to OCF? Will a deposit made into an account paying compound interest (assuming compounding occurs once per year) yield a higher future value after one period than an equal-sized deposit in an account paying simple interest? What ...How would (a) an increase in the discount rate or (b) a decrease in the time period until the cash flow is received affect the present value? Why? Why is it so difficult to find unknown interest or growth rates and numbers of periods when all other variables are known? When must you use trial-and-error techniques?
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