The P/E ratio for BMI Corporation 21, and the P/S ratio is 5.2. The industry P/E ratio is 35 and the industry P/S ratio is 7.5. Based on relative valuation, what is the BMI?
A) undervalued on the basis of relative P/E and relative P/S.
B) overvalued on the basis of relative P/E and undervalued on the basis of relative P/S.
C) undervalued on the basis of relative P/E and overvalued on the basis of relative P/S.
D) overvalued on the basis of relative P/E and relative P/S.
E) none of the above.

Question

Quizplus · Accepted Answer

Relative P/E = 21/35 = undervalued
Relative P/S = 5.2/7.5 = undervalued

The P/E Ratio for BMI Corporation 21, and the P/S