A High Price to Book Ratio May Indicate Which One

question 69

Multiple Choice

A high price to book ratio may indicate which one of the following?

• A) The firm expanded its plant and equipment in the past few years.
• B) The firm is doing a better job controlling its inventory expense than other related firms.
• C) Investors may believe that this firm has opportunities of earnings a rate of return excess of the market capitalization rate.
• D) The firm's P/E ratio is too high.

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