Author Question: In the price/earnings approach to stock valuation, (Read 61 times)

connormoss · **on:** Mar 29, 2022

Question 1

Hallowell Inc. has free cash flow of $2.5 million and 1.25 million shares outstanding. If you believe the price to cash flow ratio for this company should be 11, what is the highest price you should pay for the stock?
◦ $13.75
◦ $22.00
◦ $22.72
◦ $27.50

Question 2

In the price/earnings approach to stock valuation,
◦ historical stock prices are utilized.
◦ forecasted EPS are typically used.
◦ the P/E ratio is computed by multiplying the stock price by the earnings per share.
◦ the market P/E ratio, adjusted by beta, is used to value individual stocks.

miro2222 · **Reply #1 on:** Mar 29, 2022

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