Adobe Corporation Balance Sheet exerpt Year ended Dec 31st, 2019 (in thousands) Assets Cash 15,000 Accounts receivable 7,500 Inventory 7,500 Total current assets 30,000 Liabilities Accounts Payable...

Adobe is a software company that creates the most innovative creativity apps. Recently their software has become cloud based. Their price to book ratio is 1.67 and they currently have 1,000,000 shares outstanding. Below you will find an excerpt from their balance sheet for 2019

1. Critically discuss the price to book ratio in valuing stocks and provide an alternative method to see if a stock is undervalued or overvalued.
   

Extracted text: Adobe Corporation Balance Sheet exerpt Year ended Dec 31st, 2019 (in thousands) Assets Cash 15,000 Accounts receivable 7,500 Inventory 7,500 Total current assets 30,000 Liabilities Accounts Payable 7,500 Current long term debt 7,500 Total current liabilities 15000 Long term debt Total liabilities 7,500 22,500 Owners equity 7500