Putting Ratios into a Firm Value Context for Entrepreneurs and Entrepreneurship Students

Tom Arnold
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Tom Arnold: University of Richmond

Journal of Entrepreneurial Finance, 2011, vol. 15, issue 2, 23-28

Abstract: 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.

Keywords: Ratio Analysis; Valuation (search for similar items in EconPapers)
JEL-codes: A22 A23 G30 M13 (search for similar items in EconPapers)
Date: 2011
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Persistent link: https://EconPapers.repec.org/RePEc:pep:journl:v:15:y:2011:i:2:p:23-28

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