Key Management Ratios, 4th Edition

13

Financial leverage and corporate valuation

Introduction

• Financial leverage
• V chart
• Market to book ratio

Auditors are the troops who watch battle from the safety of a hillside and when the battle is over come down to count the dead and bayonet the wounded.

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Introduction

This chapter will integrate material from previous chapters into one single web supporting corporate value and it will show the relationships that exist between many of the ratios covered so far. Specifically it will:

1. establish the financial leverage links between ROTA and ROE
2. examine further the great importance of ROE
3. tie together – operating efficiency measures ...