_________is a guide to the firm's value if it is assumed that investors value the earnings of a given firm in the same way they do the average firm in the industry.

Question

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The P/E multiple is a guide to the firm's value based on how investors value earnings. It assumes that investors value the earnings of a given firm in the same way they do the average firm in the industry. The higher the P/E multiple, the higher the value placed on a firm's earnings. The P/E multiple is calculated by dividing the current market price per share by the earnings per share.

_________Is a Guide to the Firm's Value If It Is