老师请讲解一下这道题

问题如下：

Which of the following types of stocks or investment situations is not appropriate for using P/B in valuation?

选项：

A.

The company is composed mainly of illiquid assets

B.

The company is not expected to continue as a going concern

C.

The company’s EPS is highly variable or negative

解释：

Although the measurement of book value has a number of widely recognized shortcomings, P/B may still be applied fruitfully in several circumstances:

The company is not expected to continue as a going concern. When a company is likely to be liquidated (so ongoing earnings and cash flow are not relevant), the value of its assets less its liabilities is of utmost importance. Naturally, the analyst must establish the fair value of these assets.

The company is composed mainly of liquid assets, which is the case for finance, investment, insurance, and banking institutions.

The company’s EPS is highly variable or negative.