The influence of sales growth rate on business valuation Cover Image

Wpływ wzrostu sprzedaży na wartość przedsiębiorstwa
The influence of sales growth rate on business valuation

Author(s): Michał Kowalski, Marcin Świderski
Subject(s): Economy
Published by: Wydawnictwo Uniwersytetu Ekonomicznego we Wrocławiu
Keywords: value; valuation; sales growth rate

Summary/Abstract: The article presents the analysis of dependence between sales growth rate and business value. The authors drew up a mathematical model that relies on DCF valuation method and studied relationships between its parameters. First, the relationship between sales growth and companies’ ability to generate cash flow was investigated. The breakeven point at which sells growth rate translates into increase in value was determined. Next, the relationships among business value, return on sales, and sales growth rate were presented indicating that under certain conditions the sales growth can reduce the value. The zone of decrease (drop zone), in which such an effect is observed, and an equation for minimal ROS value creation, required at certain sales growth rate for company to increase its business value, were determined.

  • Issue Year: 2012
  • Issue No: 252
  • Page Range: 248-262
  • Page Count: 15
  • Language: Polish