market value ratios


An equation that compares the current stock price to a financial indicator on the company's financial statements. The most often used indicator is a company's earnings per share. For example, if a stock price is $10 and its earnings are $2 per share, then the market value ratio would be 5-to-1. Market value ratios are typically used to determine if a company is over or undervalued.

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market value clause price/earnings ratio