al economic data Economic P/E correlations are much higher than for accounting PIE Accounting inputs Price-to-book value (P/BV) Return on equity (E/BV) 0 Accounting P/E: P/BV vs. ROE' 40 35 30 25 20 15 10 5 0 -200% • •• R2 = 0.3295) • -100% 0% 100% Economic inputs Enterprise val