Question

according to the Marketability ratios for Target and Wal-Mart write a summary on the comparison of their Marketability ratios
Target: Market to Book: -30.24, PE Ratio: $14.80 , Dividend Yield: 0.090
Walmart: Market to Book: -17.07, PE: 40.86, Dividend Yield: 0.001

Answer 1

Comparison of Marketability ratios:

Market to book value ratio:

The market value to book value is a financial valuation metric used to evaluate a company’s market price relative to its book value. The market value is the outstanding shares multiplied by the current market price and the book value is the Stockholders’ equity carried in books. The stockholders’ equity is equal to Net assets (Total assets- Total liabilities). A lower ratio indicates that stock is undervalued and a higher ratio means the stock is overvalued. So Target is having a better market value to book value ratio

Price Earnings ratio (PE)

The price earnings ratio indicates the Earnings per share commands the market price. The lower ratio gives scope for market price to improve based on peer performance. Hence Target is undervalued since it has lower PE ratio. Walmart is having higher PE ratio so it is already is trading at higher price. The performance of Walmart is better than its peer and hence it has high PE ratio

Dividend ratio:

Dividend yield is the dividend expressed as percentage of market share price. The higher dividend yield is preferred by shareholder since it is measure of return on investment as regular income to shareholders. Target is having better dividend yield compared to Walmart. Hence dividend preferred investors will prefer Target shares than Walmart shares.