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Basic Question 0 of 10
The P/B multiple of a service company is usually ______ than that of a heavy equipment manufacturer.
B. lower.
C. the same as.
A. higher.
B. lower.
C. the same as.
User Contributed Comments 4
| User | Comment |
|---|---|
| katybo | and the price? |
| danlan2 | Price of a service company is similar to that of a heavy equipment manufacturer. |
| Rchan89 | i think all else equal, a service company has less fixed assets they need to purchase than an auto manufacturer. |
| davidt876 | i dont think it makes sense to comment on the price or book value in isolation. you can justify that the ratio of P/B is higher in the service industry than in manufacturing, but you can't say that P or B are absolutely higher or lower in any industry. even if you found that average book value is higher in an industry, its most likely a function of consolidation or the long-term lifecycle of the industry |
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Learning Outcome Statements
describe the classification, measurement, and disclosure under International Financial Reporting Standards (IFRS) for 1) investments in financial assets, 2) investments in associates, 3) joint ventures, 4) business combinations, and 5) special purpose and variable interest entities;
distinguish between IFRS and US GAAP in their classification, measurement, and disclosure of investments in financial assets, investments in associates, joint ventures, business combinations, and special purpose and variable interest entities;
analyze how different methods used to account for intercorporate investments affect financial statements and ratios.
CFA® 2025 Level II Curriculum, Volume 2, Module 10.