Ratio Analysis and Equity Valuation: From Research to Practice

摘要: Financial statement analysis has traditionally been seen as part of thefundamental required for equity valuation. But the typicallybeen ad hoc. Drawing on recent research accounting-based valuation, this paperoutlines a financial use in Standardprofitability is incorporated, and extended, complemented with ananalysis growth. An operating activities distinguished from theanalysis financing activities. The perspective one forecasting payoffs to equities. So presented matter pro formaanalysis future, forecasted ratios viewed building blocks offorecasts payoffs. current statements then asa identifying predictors future thatdetermine hierarchical, withratios lower ordering identified finer information about those higher up.To provide historical benchmarks forecasting, typical values aredocumented period 1963–1999, along their cross-sectionalvariation correlation. And, again view time seriesbehavior many also described “long-run,steady-state” levels are documented.