Uranus08

Does any one know why intrinsic P/E doesn't include franchise factor when inflation flowthrough is given?
intrinsic P/E = tangible P/E + franchise factor

tangible P/E = 1/r

However, in the P/E with inf. f.t formula

intrinsic P/E = 1/(real r + (1 - infl. f.t.)*inflation)). The denominator is effectively inflation adjusted r (adjusted for the flowthrough)... Where is the Franchise factor?

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Also from the same exam:
How efficiently a firm uses it's assets is indicated by ROA or Asset Turnover? The example uses Asset Turnover, but shouldn't it be ROA as ultimately net profits matter more than sales?