If a company has good growth potential, the market to book ratio should be:
A)Higher than 1
B)Lower than 1
C)Less than 0
D)Not relevant

Question

Quizplus · Accepted Answer

A market to book ratio higher than 1 indicates that the market is valuing the company at a higher price than its book value, which suggests that investors believe in the company's growth potential. An M/B ratio lower than 1 indicates the opposite, that the market has a lower valuation than the book value of the assets.

If a Company Has Good Growth Potential, the Market to Book