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This value ratio compares the price of a share to the underlying machinery and property of...

This value ratio compares the price of a share to the underlying machinery and property of the company, after paying off debts

Price to Earnings ratio

Price to Cash Flow ratio

Price to Sales ratio

Price to Book ratio
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Answer #1

The Profit Earning ratio helps investors to determine the market value of a stock as compared to the company's earnings. In short, the Price earning ratio shows what the market is willing to pay today for a stock based on its past or future earnings.

Further The price to book value ratio, compares the market and book value of the company. Assume that a company is about to be liquidated then in such a case the company will sell of all its assets, and pays off all its debts or will try to minimize the debt that the company owes. Whatever is left over is the book value of the company. The PBV ratio is the market price per share divided by the book value per share.

Thus in such case the price to book ratio or PBV ratio compares the price of a share to the underlying machinery and property of the company after paying off the debts that the company owes

Ans is profit to book ratio

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