What factors besides inflationary considerations and growth factors influence P/E ratios for the general market?
Answer to relevant QuestionsFor cyclical companies, why might the current P/E ratio be misleading? J. Jones investment bankers will use a combined earnings and dividend model to determine the value of the Allen Corporation. The approach they take is basically the same as that in Table 7–2 on page 172 in the chapter. ...If RF = 6 percent, b = 1.3, and the ERP = 6.5 percent, compute Ke (the required rate of return). If D1 = $3.00, Ke = 10 percent, and g = 12 percent, can Formula 7–5 be used to find P0? Explain the reasoning behind your answer. Given the following financial data, compute: a. Return on equity. b. Quick ratio. c. Long-term debt to equity. d. Fixed-charge coverage. Assets: Cash $ 2,500 Accounts receivable 3,000 Inventory 6,500 Fixed ...
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