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Fairfield, Patricia M.; Yohn, Teri Lombardi

doi:10.1023/a:1012430513430

Cited by 279 publications

(76 citation statements)

References 12 publications

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“…The product market strategies are implemented through the firm's competitive strategy, operating policy and investment decisions while financial market strategies are implemented through financing and dividend policy. Fairfield and Yohn (2001) mention the return on assets can be decomposed into asset turnover and profit margin. Compared with current profitability, it is more useful to provide the insights into the firm's strategy with asset turnover and profit margin.…”

Section: Literature Review Organization Strategy and Business Valuationmentioning

confidence: 99%

“…): expectation that provide information in t period ROE t+1 : return on equity in t+1 period E t (D t+i ): expected future dividends in t+1 period based on the information that can be provided in t period r e : cost of equity capital Ohlson (1995) and Feltham and Ohlson (1995) highlight the theoretical importance of ROE in business valuation. Fairfield and Yohn (2001) mention that net operating return on assets can be decomposed into asset turnover and profit margin. Asset turnover measures the firm's ability to generate revenues from its assets while profit margin measures the firm's ability to control the costs incurred to generate the revenue.…”

Section: Business Valuation Theories and Accounting Signalsmentioning

confidence: 99%

“…ATO captures the firm's efficiency in using operating assets to generate sales and is often interpreted as a measure of asset utilization by managers. Fairfield and Yohn (2001) also point out that profit margin, reflects the firm's operating efficiency while asset turnover reflects the firm's asset utilization. For example, discount stores tend to have relatively higher asset turnovers and lower profit margins than luxury or specialty stores.…”

Section: Business Valuation Theories and Accounting Signalsmentioning

confidence: 99%

“…Lev & Thiagarajan, 1993;Abarbanell & Bushee, 1998;Nissim & Penman, 2001;Fairfield & Yohn, 2001;Soliman, 2008). Soliman (2008) proposed a way that investors can reduce asymmetric information in accounting signals.…”

Section: Research Design Empirical Modelmentioning

confidence: 99%

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The Relationship between Organization Strategy, Fixed-Assets Investment and Earnings Quality

Chang

Wang²,

Huang³

et al. 2013

AJFA

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One of the important sources for investors to evaluate is the information provided in the Asian Journal of Finance & Accounting ISSN 1946-052X 2013 www.macrothink.org/ajfa 420 financial statements disclosed by firms. Past researches consider that worse financial statement quality has higher information risks from the aspect of information risks but they ignore the investors' degree of tolerance and aversion towards risks. Furthermore, the accounting signals hidden behind financial statements can be considered as important information for investors to evaluate the futurity of enterprises. Thus, it is our main research topic as how to apply accounting signals on investment risks. This study uses data of the U.S. during 1991-2008 to review the influence of accounting signals on investment risks. Result finds that in the investment management essentials in firm-wise, the accounting signals for capital expenditure ratio per person can lower the investment risks no matter in cost leadership firms or differentiation strategy firms. For the investment management essentials in industry-wise, we have the below findings: In cost leadership strategy samples, there is competitive convergence if enterprises over-pursue the fixed asset turnover ratio. In the samples that adopt differentiation strategy, increasing the ixed asset turnover ratio can enhance organization's competitiveness and reduce investment risks. This is the first study that applies capability index of accrual quality (investors' degree of tolerance and aversion towards risks) on researches of accounting signals and discovers that competitive convergence exists in organizations that adopt cost leadership strategy.

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Section: Literature Review Organization Strategy and Business Valuationmentioning

confidence: 99%

Section: Business Valuation Theories and Accounting Signalsmentioning

confidence: 99%

Section: Business Valuation Theories and Accounting Signalsmentioning

confidence: 99%

Section: Research Design Empirical Modelmentioning

confidence: 99%

See 2 more Smart Citations

The Relationship between Organization Strategy, Fixed-Assets Investment and Earnings Quality

Chang

Wang²,

Huang³

et al. 2013

AJFA

View full text Add to dashboard Cite

show abstract

“…Among the most important lines, we can mention their use for the analysis of the performance of a company's stock (Soliman, 2008) and its assets (Nissim & Pemman, 2001;Fairfield & Yohn, 2001), and to study the evolution of a company in situations of liquidity shortfalls, such as in models predicting bankruptcy (Altman & Hotchkiss, 2006). Beaver (1966) reached the conclusion that the ratios measuring the cash flows as compared to the indebtedness of the company are the best indicators to predict the financial development of the company.…”

Section: Introductionmentioning

confidence: 99%

Expansion of the current methodology for the study of the short-term liquidity problems in a sector

Casas

Linares‐Mustarós

Noguer

2018

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Purpose: The aim of this work consists of defining and applying a new methodology for the calculation of short-term financial ratios that more reliably approximate the solvency of a sector. Design/methodology:We begin with a classic sector analysis and propose the creation of ratios that limit the debt repayment on an individual level and that do not imply the compensation of aggregate balances, as occurs with the current formulas of calculation. Findings:The new methodology more reliably approximates the solvency of a sector by being able to estimate with greater precision its global capacity for short-term debt repayment. Research limitations/implications:The limitations to the proposed sector ratios are the same as the limitations of the customary individual ratios. Therefore, to offer an example, the ratios do not correct the assumption that the only source of resources to meet current liabilities is made up by available and liquid assets. In other words, no new tools are proposed to include future income from sales by the companies. Practical implications:To be able to study the solvency of the different sectors that make up the economy with more uniform criteria. Social implications:The information provided by the new ratios obtained in this work proves to be relevant information in the case of wanting to determine the degree of dependence of companies in a sector on financial institutions, or in the case of wanting to determine the degree of dependence on aid in a subsidized sector. Originality/value:The proposal of new tools that go beyond the current limitations.

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Financial Ratios and Equity Valuation

Penman

2015

Wiley Encyclopedia of Management

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This article presents a systematic scheme of financial statement analysis that comprehensively analyzes all aspects of the financial statements that inform about a valuation. The analysis flows from the residual earnings valuation model but applies as well to other valuation methods such as discounted cash flow valuation and earnings capitalization. The financial statement analysis hierarchy breaks residual earnings down into its financial statement drivers which, in turn, attach to the activities of the firm that generate its value. A key aspect is the separation of operating activities from financing activities, with operating activities then subject to a detailed analysis that maps into value.

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Untitled

Cited by 279 publications

References 12 publications

The Relationship between Organization Strategy, Fixed-Assets Investment and Earnings Quality

The Relationship between Organization Strategy, Fixed-Assets Investment and Earnings Quality

Expansion of the current methodology for the study of the short-term liquidity problems in a sector

Financial Ratios and Equity Valuation

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