A Note on a Framework for Valuation Ratios Based on Fundamentals*
Contemporary Accounting Research · 2020 · Volume 37 · Issue 4
Abstract
Valuation ratios divide stock price by accounting metrics such as earnings, earnings growth, and book value. This study adapts the general valuation framework in Ohlson and Juettner-Nauroth (2005) and Ohlson (2005) to present a unified approach for developing valuation ratios based on fundamentals, referred to as fundamental valuation ratios. One starts with a valuation model that is driven by an accounting metricaand its abnormal growth, then divides the valuation model byato get a fundamental valuation ratio. For any valuation ratio, one can find a corresponding fundamental valuation ratio, as long as the valuation model is based on the same metricaas the valuation ratio denominator.
Keywords
fundamentals, growth, ratios, valuation, indicateurs fondamentaux, croissance, ratios, évaluation
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