The role of financial ratios on evaluation of stock values: An application in Bist

Abstract

Financial ratios obtained from past data are used in estimations of the future, which is financially uncertain, in many studies and analyses. In this regard, financial ratios can be used to determine stock values and therefore the value of the company. The objective of this study is to determine the relationship between the financial ratios of companies and stock values. Accordingly, ten year and quarterly data of16 cement factories whose stocks are traded on the Istanbul Stock Market (BIST) between years 2005-2014 are studied. In the study, current ratio, acid test ratio, liability ratio, accounts receivable turnover rate, inventory turnover rate, market value/book value are used as independent variables. Financial leverage and size of assets are used as control variables and stock value is used as the dependent variable. In accordance with the results of panel data analysis, it is seen that there is a meaningful relationship between acid-test ratio, liability ratio, market value/book value and financial leverage and between stock values. © Peter Lang GmbH, Internationaler Verlag der Wissenschaften, Frankfurt am Main 2016. All rights reserved.