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  "notes": "Includes a footnote formula for cost of equity related to financial leverage.",
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      "text": "10 The cost of equity is related to the degree of financial leverage through the equity beta: Bequity = Basset + D/E (Basset - Bdebt)",
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      "text": "Best used as a supplement to other measures",
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      "text": "A useful measure where tangible assets are key",
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      "text": "Cash earnings are usually defined as simply net profit plus depreciation & amortisation. This is a rough and frequently misleading measure of cash flow. This problem is magnified when using prospective cash earnings. As a result, price to cash earnings is difficult to use as a base valuation measure. Price to cash earnings should be used as a supplement to other measures.",
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      "text": "An important weakness of the PE ratio is that it does not explicitly take into account balance sheet risk. Furthermore, the PE ratio does not explicitly take into account the amount of investment required to support future growth.",
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      "text": "Price to book value is a useful measure where tangible assets are the source of value generation. Because of its close linkage to return on equity, it is useful to view price to book value together with ROE.",
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      "text": "Definition: Market capitalisation/book value (alternatively price per share/book value per share).",
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      "text": "Definition: Market capitalisation/net income attributable to common shareholders plus depreciation, amortisation and changes in non-cash provisions.",
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      "text": "Formula: Market cap / Book value = ((ROE - g) / (ROE x (COE - g))) x ROE or (ROE - g) / (COE - g)",
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      "text": "Formula: Market cap / Cash earnings = (ROE - g) / (ROE x (COE - g)) x Earnings / Cashearnings",
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      "text": "Valuation Multiples: A Primer",
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