Hello everybody,
I had a question the other day during an interview I couldn't answer. Can you please tell me what is the impact of raising equity on P/BV ratio ? I was told there are 3 situations.
Thank you so much !
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If you raise equity with p/b below 1, p/b increases. If p/b is already 1, it stays the same. If p/b is above 1, p/b decreases. For all, both price and book should go up by same dollar amount (raising cash). But percentage changes will be different depending on existing levels, which leads to results above.
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