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Market value ratios relate the firms stock price to its earnings, cash flow, and book value per share, and thus give management an indication of
Market value ratios relate the firms stock price to its earnings, cash flow, and book value per share, and thus give management an indication of what investors think of the companys past performance and future prospects. If the liquidity, asset management, debt management, and profitability ratios all look good, then the market value ratios will be high, and the stock price will probably be as high as can be expected.
Identify three market value ratios and explain what they mean or what they show/reveal about a company.
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