Question

For a firm to have a high market-to-book ratio value, the firm generally needs to have

Answer 1

Market to book value ratio illustrates a company’s current market value to its book value. The market value is measured as the current stock price multiplied by the outstanding shares of a company. The book value is the amount that would be left over if a company liquidated all its assets and repaid all liabilities.

A high market to book value ratio indicates that the firm’s stock is overvalued. It indicates that investors have high expectations of future earnings for the firm