Although Financial Ratio Analysis has limitations, it is a great tool to find the problematic areas in the company so that managers can go back and address the problems. One of the limitations is differences in accounting standards around the world that can distort financial ratios.
Select two publicly traded US companies listed on the NASDAQ stock market and calculate each company’s P/E (Price to Earnings Ratio) and MB (Market to Book Ratio). What do these ratios tell you about how investors value these two companies’ future prospects?
*Make sure your selected companies are different than your classmates’.
For your discussion post, your first step is to summarize the article in two paragraphs, describing what you think are the most important points made by the authors (remember to use citations where appropriate). For the second step, include the reference listing with a hyperlink to the article. Do not copy the article into your post and limit your summary to two paragraphs. Let your instructor know if you have any questions and enjoy your search.
You are required to reply to at least two peer discussion question post answers to this weekly discussion question and/or your instructor’s response to your posting. These post replies need to be substantial and constructive in nature. They should add to the content of the post and evaluate/analyze that post answer. Normal course dialogue doesn’t fulfill these two peer replies but is expected throughout the course. Answering all course questions is also required.
- Chapter 4 in Foundations of Finance – Evaluating a Firm’s Financial Performance
- Benlemlih, M., & Cai, L. (2019). Corporate environmental performance and financing decisions. Business Ethics: A European Review, 29(2), 248-265.
- Fatihudin, D., & Mochklas, M. (2018). How measuring financial performance. International Journal of Civil Engineering and Technology (IJCIET), 9(6), 553-557. Retrieved from https://www.researchgate.net/publication/326141100_How_Measuring_Financial_Performance