Guys PE ratio of 10 indicates that the company is neither...

Guys PE ratio of 10 indicates that the company is neither growing nor expanding.

A company who makes $3 million per year in this instance should have a market cap of $30million.

When valuing a company who will be making the same profits every year in perpetuity, you divide the cash flow of one year by 0.1.

It makes sense how could you buy a business that generates profits of $3 million per year for only $3 million.

Cheers