Price-to-book value ratio cannot be used to estimate the value of firms with negative earnings or negative cash flows.

Name: Price-to-book value ratio cannot be used to estimate the value of firms with negative earnings or negative cash flows.
Brand: Quizplus
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Question

Quizplus · Accepted Answer

The price-to-book value ratio is based on a company's market capitalization divided by its book value, and it can be used regardless of a company's earnings or cash flow status, as it does not directly relate to profitability.

Price-To-Book Value Ratio Cannot Be Used to Estimate the Value