justified price multiples

why is return minus growth always used as the denominator to represent earnings for all the justified multiples?

It comes from your GGM

Everything in that reading can be drived from P0 = D1 / r-g

Although I’m having trouble deriving with P/B ratio being (ROE - g) / (r-g)

Spot on.

Take a look at the article I wrote on justified ratios; I have all of the derivations: http://financialexamhelp123.com/justified-ratios-price-multiples/.


I made it much harder than needed.

You’re welcome.

Good that you got that out of your system before the exam.