What is the P/S for true Home?

Which Valuation approach would be most apprpraite for valuing True Home?

Garcias preference in using the P/E over the P/S in valuing True Home is supported by all reasons he gave except ___?

Garcia advises Rittenhouse that he is considering three different price-to earnings ratio (P/E) approaches to value the shares of True Home: Approach 1-P/E using leading earnings. Approach 2-P/E using trailing earnings. Approach 3-P/E using normalized earnings. Garcia tells Rittenhouse that he calculated the price-to-sales ratio (P/S) for True Home but chose not to use it in the valuation of the shares. Garcia states to Rittenhouse that it is more appropriate to use the P/E than the P/S because: Reason 1-P/S does not reflect differences in cost structures among different companies. Reason 2-Earnings are less easily manipulated by accounting methods than are sales. Reason 3-Surveys show P/E ranks first among price multiples used in market-based valuation. One of Garcia's co-workers, Martina Diaz, has gathered additional data for True Home which is shown in Exhibit 2. After Garcia brings this data to Rittenhouse's attention, Rittenhouse asks Garcia to also determine whether True Home is overvalued, fairly valued, or undervalued based on its justified price-to-book ratio (P/B)