Ratio analysis is generally presented as something that has to be calculated after completing other financial statements and is generally viewed, particularly by students, as busy-work with little value. This paper changes the context of ratio analysis in order to demonstrate how a focus on the information provided by ratios adds to the value of the firm. By dissecting the valuation of a publicly traded firm using a price to earnings ratio multiplier, value generating factors in the form of ratios, can be inferred for smaller non-publicly traded ventures.
A22, A23, G30, M13
Ratio Analysis, Valuation
"Putting Ratios into a Firm Value Context for Entrepreneurs and Entrepreneurship Students,"
The Journal of Entrepreneurial Finance:
2, pp. 23-28.
Available at: http://digitalcommons.pepperdine.edu/jef/vol15/iss2/2