Question
Firm A has a stock market value of 20m (number of shares in issue x share price), while firm B is valued at 15m.
Firm A has a stock market value of 20m (number of shares in issue x share price), while firm B is valued at 15m. The firms have similar profit histories: Firm B Firm A m m 2014 1.5 1.8 2015 1.6 1.0 2016 1.7 2.3 2017 1.8 1.5 2018 2.0 2.0 Provide some potential reasons why, despite the same total profit over the last five years, shareholders regard firm A as being worth 5m more (extend your thoughts beyond the numbers in the table).
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