Question: Describe the difference between a projected stock price based on the Price/Sales valuation method versus a projected stock price based on the Price/Earnings valuation method.

  1. Describe the difference between a projected stock price based on the Price/Sales valuation method versus a projected stock price based on the Price/Earnings valuation method.

a. What does each method measure that results in different projected stock prices?

b. Which method gives a more accurate price when purchasing a company? Why?

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