You would like to know the value of a firm's equity today in relation to the cost of that equity. Which one of the following ratios will provide you with this information?
A)price-earnings
B)price-book
C)price-sales
D)price-cash flow
E)price-assets

Question

Quizplus · Accepted Answer

The price-book ratio compares a firm's market value to its book value, directly relating the value of a firm's equity today to its cost. This ratio is useful for assessing whether a stock is over or undervalued by comparing the market price of the company's shares to the equity value recorded in the financial statements.

You Would Like to Know the Value of a Firm's