| Ail said: Generally speaking you can differentiate companies into two different kinds.
If you look at mutual funds or follow the stock market you will find those terms of 'value' and 'growth' often. There are typically investors specializing in each kind. Value investors focus on Price/book and what they think is the good price for the company based on what it has done so far and what it has on its book. Growth investors focus on future P/E and growth potential...
During it's lifecycle a company usually starts as a growth stock and over time becomes a value stock as its growth slow down provided it has found a good market... Microsoft was a growth stock for a long time but is actually now slowly becoming a value stock ( it does not have that much assets ( well it has a lot of cash in the bank which is assets in a way) but Microsoft occupies such a key market of today's world that the possibility of the company suddenly crashing is very very low.........
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So investers generaly work with either kind of stock specialising in one or the other right ?
i'm guessing growth stock is potentialy more beneficial value stock because of the potential risk of investment right ?
Why does microsoft have such huge reserves of cash , i'm guessing they have more than enough to cover the overheads of the business why don't shareholders pocket it ?
