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Financial Reporting, Financial Statement Analysis and Valuation 9th Edition

Financial Reporting, Financial Statement Analysis and Valuation (9th Edition)

Book Edition9th Edition
Author(s)Wahlen
ISBN9781337614689
PublisherCengage
SubjectFinance
Chapter 14, End of Chapter, Questions and Exercises, Exercise 14.1
Page 904

Value Determinants. 

 

What are the fundamental determinants of share value, and how do they affect market-based valuation multiples, such as market-to-book and price-earnings ratios?

Verified Answer

The fundamental determinants of share value are as follows:

  • The determinants of firm value such as risk, growth, cash flows, expected earnings, etc. These determinants help in determining the firm's market value and share prices.
  • The market value of the firm and price to earnings ratio. 
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