6 Factors That Determine Your Company’s Valuation
Investors consult detailed, quantitative models before making decisions. Shouldn’t corporate managers have a similar understanding of how the market values their company, so they can make informed decisions to maximize shareholder value? An EY-Parthenon analysis of quarterly data from thousands of c…
✒ Factors based on an EY-Parthenon analysis of quarterly data from thousands of companies in hundreds of industries over a period of 20 years:
- Weighted forecasts of growth in company revenue
- Weighted forecasts of growth in company margin
- Patterns of cash returned to shareholders
- Changes in the company’s debt-to-equity ratio
- The economic conditions in the company’s industry
- Market volatility in the geographic areas in which the industry’s major companies compete
Valuation clarity can help identify opportunities and threads, but note that the impacts of these internal and external factors vary across industries, and these valuation drivers do change over time.