In valuation of common stock, the price/earnings multiple approach is considered superior to the use of book or liquidation values since it considers expected earnings.

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The price/earnings multiple approach takes into account the expected earnings of the company, which is a key factor in determining the value of common stock. Book or liquidation values may not accurately reflect the future earnings potential of the company and therefore may not provide an accurate valuation of common stock. Therefore, the price/earnings multiple approach is generally considered superior to these methods.

In Valuation of Common Stock, the Price/earnings Multiple Approach Is