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 companies in hundreds of industries over a period of 20 years has identified six critical factors that account for most of the variability in market valuations. Management teams can use these to create a model that allows them to compare industries, companies across industries, and companies within the same industry. The model can also help leaders understand changes in how the market values any of these companies over time.

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