What is the primary factor that determines the price you pay to acquire a business?

Business concept Valuation Market trends Competition

What do valuation ratios help us understand?

Company's profitability Stock market volatility Attractiveness of stock price Management efficiency

Which of the following is NOT a key valuation ratio?

Price to Sales (P/S) Price to Earnings (P/E) Debt to Equity Ratio Price to Book Value (P/BV)

Why might investors prefer the Price to Sales (P/S) ratio over earnings-based ratios?

Earnings can be cyclical Accounting rules can obscure profitability Sales are more stable All of the above

What does the 'Book Value' of a firm represent?

Company's total assets Net worth of the company Amount received upon liquidation after settling obligations Total revenue generated by the company

What does a high Price to Book Value (P/BV) ratio suggest?

The stock is undervalued The company has high sales The stock is overvalued The company has low debt

What does the Earnings Per Share (EPS) measure?

Company's total earnings Profitability on a per-share basis Stock market performance Dividend payout ratio

What does a high Price to Earnings (P/E) ratio indicate?

The stock is a bargain The company has high earnings Market participants are willing to pay a premium for each rupee of profit The company is expected to perform poorly

What is a potential risk associated with relying solely on the P/E ratio?

Earnings can be manipulated P/E ratios are difficult to calculate P/E ratios are not publicly available P/E ratios fluctuate too frequently

How is the P/E ratio for a stock market index like the Nifty 50 calculated?

Average of individual stock P/E ratios Total market capitalization divided by total earnings of all companies in the index Weighted average based on company size Sum of individual company earnings divided by total market capitalization

According to historical data, when is it generally considered a favorable time to invest in the Indian stock market based on the Nifty 50 P/E ratio?

When the P/E ratio is above 22x When the P/E ratio is around 18x When the P/E ratio is 16x or below When the P/E ratio is at its peak