Aratatech is a multinational distributor of semiconductor chips and related products to businesses. Its leading competitor around

Question:

Aratatech is a multinational distributor of semiconductor chips and related products to businesses. Its leading competitor around the world is Trymye Electronics. Aratatech has a current market price of $ 10.00, 20 million shares outstanding, annual sales of $1 billion, and a 5 percent profit margin. Trymye has a market price of $ 20.00, 30 million shares outstanding, annual sales of $ 1.6 billion, and a profit margin of 4.9 percent. Based on the information given, answer the following questions:
A. Which of the two companies has a more attractive valuation based on P/S?
B. Identify and explain one advantage of P/S over P/E as a valuation tool.

Fantastic news! We've Found the answer you've been seeking!

Step by Step Answer:

Related Book For  answer-question

Equity Asset Valuation

ISBN: 978-0470571439

2nd Edition

Authors: Jerald E. Pinto, Elaine Henry, Thomas R. Robinson, John D. Stowe, Abby Cohen

Question Posted: