Relationship between financial ratios and stock value (original) (raw)

2021, International Journal of Health Sciences (IJHS)

Financial ratios examines the items in the financial statements and converts them from Rial concept to comparable ratios. These ratios establish a meaningful relationship between the effective factors of financial statements and by establishing this relationship between the information in the financial reports, it gives the users the power of analysis. In this research, the relationship between the changes in financial ratios and the stock value of companies listed in the Tehran Stock Exchange is investigated. For this purpose, financial ratios were divided into liquidity ratios, profitability ratios, efficiency ratios, and debt ratios to measure liquidity ratios from current ratio and current ratio indicators, to measure profitability ratios from gross profit margin ratios, Return on sales, return on assets and return on equity were used. Also, in order to measure efficiency ratios, indicators of inventory turnover, accounts receivable turnover, and debt payment period were used, and finally, debt ratio and capital ratio were used to measure leverage ratios. The results showed that the results of the first hypothesis showed that there is a positive and significant relationship between the current ratio and the future ratio with stock value. In fact, the increase in current ratios and instantaneous ratio leads to an increase in the stock value. In this way, the increase in liquidity is a factor that can help improve the stock value. The results of the second hypothesis show that there is a positive and significant relationship between gross profit margin, return on sales, return on assets and return on equity with stock value. In fact, increasing the profitability indicators helps to increase the value of the company's shares. The results of the third hypothesis showed that there is a relationship between efficiency ratios and stock value. In fact, the increase in inventory turnover, the increase in the receivables collection period, and the decrease in the debt payment period increase the value of the company's shares. Finally, the results 814 of the fourth hypothesis showed that there is a relationship between leverage ratios and the company's stock value. In fact, an increase in the debt ratio leads to a decrease in the stock value and an increase in the capital ratio leads to an increase in the company's stock value.