The effect of financial ratios on the firm value and earnings per share

Abstract

The present study investigates the effect of financial ratios, operating cash flows and firm size on earnings per share and firm value of companies in IT sector. In the present study, the ratios like Net Profit Margin, Current Ratio, Asset Turnover Ratio, Operating cash Flows and Firm Size are used as the independent variables while the earnings per share and Firm Value are used as the dependent variable. Twelve hypotheses were formulated to investigate the research independent variables with earnings per share and Firm Value and were tested using regression model. The results were consistent with the research results of Legziyan et al. (2011), Martani et al.(2009) and Taani and Banykhaled (2011) but inconsistent with the research results of Martani et al. (2009), Zeynali and Mohammadshilan (2011).