1. The P/E method of valuation is appropriate for Value investors.  What does it mean if the P/E ratio is higher than the industry average?  Should you buy the stock or not?

EBK CONTEMPORARY FINANCIAL MANAGEMENT
14th Edition
ISBN:9781337514835
Author:MOYER
Publisher:MOYER
Chapter8: Analysis Of Risk And Return
Section: Chapter Questions
Problem 12QTD
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1. The P/E method of valuation is appropriate for Value investors.  What does it mean if the P/E ratio is higher than the industry average?  Should you buy the stock or not?

2. Why is EPS an inferior measure compared to cash flow?  In what way is it a superior measure for stock investing compared to cash flow analysis?

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