Price to Book Ratio ROE = Net Income/Book Value of Equity
ROE(1-PR) where ROE is return on capital and PR is dividend payout ratio calculates the effective sustainable growth rate. The quotient of the difference between the return on equity & sustainable growth rate and difference between dividend payout ratio & sustainable growth rate constitutes a subjective ratio for the security in question. (ROE-SGR)/(PR-SGR) where ROE is return on equity, PR is dividend payout ratio, and SGR is sustainable growth rate.
Hypothetical Scenario
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