Market value ratios give management an indication of what investors think of the company's and future prospects. The market value ratios include: (1) Price/Earnings ratio, (2) Market/Book ratio, and (3) Enterprise Value/EBITDA ratio. The Price/Earnings (P/E) ratio shows how much investors are willing to pay per dollar of current . Its equation is: P/E ratios are for firms with strong growth prospects and relatively little risk but for slowly growing and risky firms. The Market/Book (M/B) ratio is another indication of how investors regard a firm. Its equation is: Companies with risk and growth have high M/B ratios. M/B ratios typically exceed , which means that investors are willing to pay more for stocks than their accounting book values. Unlike the P/E and M/B ratios, the EV/EBITDA ratio looks at the relative market value of all the company’s key financial claims. The EV/EBITDA ratio heavily influenced by the company’s debt and tax situations. Enterprise value = Market value of equity + Market value of total debt + Market value of other financial claims – Cash and equiva