Proof: Company Growth Valuations

GOALS

Prove that companies that are experiencing growth are valued at more than companies without growth by using third party sources that support the above statement, in order to build a research paper.

EARLY FINDINGS

  • The "Times-Revenue" method is a valuation process used to determine how much a company is worth based upon the business's revenues over a period of time. Investopedia states that a company with greater growth and expansion rates will likely have a higher times-revenue multiple, resulting in a more valuable business.
  • According to The Motley Fool, "Companies are most commonly valued via their earnings," and in order to compare company valuations, the best place to look at is a business's stocks, earnings per share (EPS), and price per earnings (P/E) ratio.
  • The P/E ratio of a company is equivalent to their stock price divided by their last four quarters' earnings combined. It is also considered to be equivalent to the rate of growth of a company's earnings per share, and thus represents growth (and value) effectively.
  • According to "The rule of 40," if the growth rate of a company is added to the profit margin and the sum is equivalent to 40% or more, then a company is considered to be successful and growing.

clarifications

1. What types of sources are you looking for? We understand you want "third-party sources," but in terms of source quality, what do you need? Scholarly articles? White papers? Business reports? News articles? Blogs? etc.

2. When you say company growth, what exactly do you mean here? In what way should a company be growing in order to correspond with their company value? In terms of revenue? Employees? Customer base? etc.

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