The current market-to-book (M/B) and forward price-earnings (P/E) ratios for two companies, A Ltd. and B Inc., are presented below. The two companies are direct competitors in the same industry sector, produce the same product and sell it to the same set of customers. They have the same scale of operation and the same capital structure. The average values of the market-to-book (M/B) and forward price-earnings (P/E) ratios for the industry sector are also presented below.

A Ltd. B Inc. Industry Mean

Price-Earnings (P/E) ratio 4.50 4.50 5.00

Market-to-Book (M/B) ratio 0.50 0.75 3.90

Based on this information, which of the following statements can NOT be TRUE?

	1.	The forecasted earnings for next year is the same for both firms because they have the same forward price-earnings (P/E) ratio
	2.	B Inc. has experienced a greater growth in its book value than has A Ltd. because it has a higher market-to-book (M/B) ratio
	3.	Both firms use the same accounting methods
	4.	Both firms have positive abnormal earnings (residual income) because both have a market-to-book (M/B) ratio exceeding a value of zero