The current and 5-year price- earnings and price-book ratios for Eastover and Southampton. Introduction: The price-earnings ratio is the ratio of current share price o the price of per-share of the firm. The high value of this ratio means the investor has growth in the future. In general, the value should be lies between 20 and 25.

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Chapter 19, Problem 7CP

A

Summary Introduction

To calculate: The current and 5-year price- earnings and price-book ratios for Eastover and Southampton.

Introduction: The price-earnings ratio is the ratio of current share price o the price of per-share of the firm. The high value of this ratio means the investor has growth in the future. In general, the value should be lies between 20 and 25.

B

Summary Introduction

To explain: The disadvantage of the relative price-earning and price-book ratios.

Introduction: The relative price-earnings is the ratio of current price-earning to the relative price index. It gives the relative value of P/E. the price-book value can be varied in the future. It cannot tell about the future growth of the firm.

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