The CFO for ABC Healthcare Corporation assessed the market value by reviewing its price/earnings ratios. The price/earnings ratio determines the market value of a stock as compared to the company's earnings. The price/earnings ratios are listed in the chart below. To calculate the price/earnings ratio, the CFO took the earnings per share and divided that into the market value. As an example, this means that in 2019 investors were willing to pay $12.10 for $1 of earnings.

lTo further assess market value, the CFO looked at book value per share. The book value per share ratio is the per share value of a company in terms of the equity available to stockholders. The book values per share over the past three years are listed in the chart below:

The price-to-book ratio (P/B ratio) compares a firm's market capitalization to its book value. It's calculated by dividing the company's stock price per share by book value per share. Here, for fiscal year 2019, the book value per share ratio was 0.42. This explains that investors were willing to pay $0.42 for $1 of book value equity. Price to book value is an important measure to see how much equity shareholders are paying for the net assets value of the company. P/B ratios under 1 are typically considered solid investments.

• Based on your analysis, what is your general perception of the companys financial strength? Is it performing well given industry standards? How does it compare to its closest rival, HCA Healthcare? What information do you need in order to conduct such an analysis?

Price/Ratio Ratio 2019 2018 2017 Market Price 83.62 83.62 83.62 Book Value per Share 199.1 209.05 226 Price to Book Ratio .42 .40 .37 Price/Ratio Ratio 2019 2018 2017 Market Price 83.62 83.62 83.62 Book Value per Share 199.1 209.05 226 Price to Book Ratio .42 .40 .37