Question: Explain why using the P/E relative value approach may be useful for companies that do not pay dividends.

Explain why using the P/E relative value approach may be useful for companies that do not pay dividends.

Step by Step Solution

★★★★★

3.46 Rating (166 Votes )

There are 3 Steps involved in it

1 Expert Approved Answer
Step: 1 Unlock

Since dividends are nonexistent the forecast stock price is simply a function of current pr... View full answer

blur-text-image
Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock
Step: 3 Unlock

Document Format (1 attachment)

Word file Icon

335-B-F-F-M (4235).docx

120 KBs Word File

Students Have Also Explored These Related Finance Questions!

Q:

Explain why using the local property tax to finance a given quantity and quality of public schooling can result in low tax rates in rich jurisdictions but high tax rates in poor jurisdictions. How do...

Q:

Explain why using the smaller of n1 - 1 or n2 1 degrees of freedom to determine the critical t instead of Formula (2) is conservative.

Q:

Explain why using the midpoint formula for calculating the elasticity of demand gives the same result whether price increases or decreases, but using the initial price and quantity instead of the...

Q:

How important is growth to a stocks value? Illustrate with examples. In addition, under what conditions would the constant growth rate model not be appropriate? Explain why using the P/E relative...

Q:

Question 3 : How important is growth to a stock s value? Illustrate with examples. In addition, under what conditions would the constant growth rate model not be appropriate? Explain why using the P...

Q:

Explain why using the P/E relative value approach may be useful for companies that do not pay dividends. (LG7)

Q:

Explain why using the P/E relative value approach may be useful for companies that do not pay dividends. (LG8-7)

Q:

Please help with the discussion below: ** Each of the 3 questions below only need to beabout two-threepara graphs but packed full of information, no fluff. **Attached below are a few readings from...

Q:

Can You please paraphrase this for me? Thanks! or current Stock Valuation While it comes to investing, picking the right stock plays a crucial role. Careful research and patience are needed. One...

Q:

READ THE FOLLOWING ARTICLE AND THEN WRITE A SUMMARY AND DESCRIBE WHICH VALUATION METHOD DISCUSSED IN THE ARTICLE YOU FIND TO BE MOST EFFECTIVE AND WHY. Write a minimum of 400 words. When trying to...

Q:

Espiritu Construction Co. has used the cost-to-cost percentage-of-completion method of recognizing revenue. Tony Espiritu assumed leadership of the business after the recent death of his father,...

Q:

Your client, Salvador Plastics Co., found three suitable sites, each having certain unique advantages, for a new plant facility. In order to thoroughly investigate the advantages and disadvantages of...

Q:

15. Sales personnel for Skillings Distributors submit weekly reports listing the customer contacts made during the week. Asample of 65 weekly reports showed a sample mean of 19.5 customer contacts...

Q:

21. A barber must serve 8 customers everyday to cover the infrastructural costs. His number of customers per day has a mean of 10. What is the probability that he will serve less than 8 customers a...

Q:

Change in NWC You are evaluating a project for The Tiff-any golf club, guaranteed to correct that nasty slice. You estimate the sales price of The Tiff-any to be $400 per unit and sales volume to be...

Q:

Project Cash Flows You have been asked by the president of your com- pany to evaluate the proposed acquisition of a new special-purpose truck for $60,000. The truck falls into the MACRS 3-year class,...

Q:

After-Tax Cash Flow from Sale of Assets If the lathe in the previous problem can be sold for $5,000 at the end of year 3, what is the after-tax salvage value? (LG4)

Q:

Bird's Eye Treehouses, Incorporated, a Kentucky company, has determined that a majority of its customers are located in the Pennsylvania area. It therefore is considering using a lockbox system...

Q:

Scenario: A therapist wanted to examine marital happiness in couples participating in therapy at her clinic. Couples were randomly assigned to participate in individual, couples, or group therapy....

Q:

If sales volume decreases, and all other factors remain unchanged, the contribution margin ratio will decrease - Vf. 1. 2. In two companies making the same product and with the same total sales and...