Ratios are mostly calculated based on the financial statements of a firm. However, another group of ratios, called market-based ratios, relate to a firm's observable market value, stock prices, and book values, integrating information from both the market and the firm's financial statements. Consider the case of Taggart Goods Corp.: Taggart Goods Corp. just reported a net income of $9,000,000, and its current stock price is $34.00 per share. Taggart Goods Corp. is forecasting an increase of 25% for its net income next year, but it also expects it will have to issue 2, 500,000 new shares of stock (raising its shares outstanding from 5, 500,000 to 8,000,000). If Taggart Goods Corp.'s forecast turns out to be correct and its price-to-earnings (P/E) ratio does not change, what does Taggart Goods Corp. expect its stock price to be one year from now? $29.23 $34.00 $21.92 $36.54 One year later, Taggart Goods Corp.'s stock is trading at $42.38, and the company reports its common equity value as $46, 768,000. Taggart Goods Corp.'s market-to-book (M/B) ratio is. Is it possible for a company to have a negative EPS and thus a negative P/E ratio? Which of the following statements is true about market value ratios? High P/E ratios could mean that the company has a great deal of uncertainty in its future earnings. Low P/E ratios could mean that the company has a great deal of uncertainty in its future earnings