What are the formulae for justified P/E, P/B, and P/S ratios? Also if dividend payout = 60%, r=15%, expected g=5%, isn’t justified trailing p/e 6.0x? 60% / (15%-5%)
P/E Leading = (1 - b) / (r - g) P/E Trailing = (1-b)(1+g)/(r-g) P/B = (ROE-g)/(r-g) P/S = (E/S)(1-b)(1+g)/(r-g) and your answer is correct.