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However, sales do not reveal the whole picture, as the company may be unprofitable with a low P/S ratio. Because of the limitations, this ratio is usually used only for unprofitable companies, since they don't have a price–earnings ratio (P/E ratio). [2] The metric can be used to determine the value of a stock relative to its past performance.
The price-to-book ratio (P/B) is a commonly used benchmark comparing market value to the accounting book value of the firm's assets. The price/sales ratio and EV/sales ratios measure value relative to sales. These multiples must be used with caution as both sales and book values are less likely to be value drivers than earnings.
Taxation. Taxes and subsidies change the price of goods and, as a result, the quantity consumed. There is a difference between an ad valorem tax and a specific tax or subsidy in the way it is applied to the price of the good. In the end levying a tax moves the market to a new equilibrium where the price of a good paid by buyers increases and ...
A good's price elasticity of demand ( , PED) is a measure of how sensitive the quantity demanded is to its price. When the price rises, quantity demanded falls for almost any good ( law of demand ), but it falls more for some than for others. The price elasticity gives the percentage change in quantity demanded when there is a one percent ...
In addition to the absolute pass-through that uses incremental values (i.e., $2 cost shock causing $1 increase in price yields a 50% pass-through rate), some researchers use pass-through elasticity, where the ratio is calculated based on percentage change of price and cost (for example, with elasticity of 0.5, a 2% increase in cost yields a 1% increase in price).
According to the United States Department of Agriculture, the average moderate-cost monthly food plan for an adult (aged 19-50) is $367 for men and $310 for women. More aggressive savings when ...
CVP is a short run, marginal analysis: it assumes that unit variable costs and unit revenues are constant, which is appropriate for small deviations from current production and sales, and assumes a neat division between fixed costs and variable costs, though in the long run all costs are variable.
The Lerner index is defined by: where P is the market price set by the firm and MC is the firm's marginal cost. The index ranges from 0 to 1. A perfectly competitive firm charges P = MC, L = 0; such a firm has no market power. An oligopolist or monopolist charges P > MC, so its index is L > 0, but the extent of its markup depends on the ...