Calculate the justified forward P/B ratio for a company with the following characteristics: Profit margin =...

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Calculate the justified forward P/B ratio for a company with the following characteristics: Profit margin = 4% Total asset turnover = 1.6 Equity multiplier - 2 Dividend growth rate = 2% Cost of equity = 7% What is the ROE? What is the justified forward P/B ratio? If the analyst assumes a profit margin of 3% instead of 4%, what is the new justified forward P/B ratio? Calculate the justified forward P/B ratio for a company with the following characteristics: Profit margin = 4% Total asset turnover = 1.6 Equity multiplier - 2 Dividend growth rate = 2% Cost of equity = 7% What is the ROE? What is the justified forward P/B ratio? If the analyst assumes a profit margin of 3% instead of 4%, what is the new justified forward P/B ratio?

Answer rating: 100% (QA)

First lets calculate the Return on Equity ROE using the DuPont Identity formula ROE Profit Mar... View the full answer