Metrics for Business Valuation|My essay solution
Posted: March 16th, 2023
A minimum of 175 words.
A public company’s value can be calculated by different approaches depending on the data available and are often shared through quarterly or annual reports, or financial statements.
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If you were a financial and investment analyst for a publicly traded company, you may be asked to give a presentation on how the company uses performance metrics in corporate valuation. Think about how you would present return on equity (ROE) and earnings per share (EPS) to a group of investors or senior management. Review a publicly traded company’s ROE and EPS. What do these results say about the company?
SOLUTION
As a financial and investment analyst, I would present ROE and EPS as two key metrics that investors and management should consider when evaluating the performance of a publicly traded company. Return on equity (ROE) measures how much profit a company generates with the money shareholders have invested in the company. ROE is calculated by dividing the company’s net income by its average shareholder equity. A high ROE indicates that a company is efficiently using its shareholder equity to generate profits.
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