Internal or External Factors Impact a Company’s Stock Prices
Submitted by: Submitted by shortfused
Views: 319
Words: 1044
Pages: 5
Category: Business and Industry
Date Submitted: 11/12/2013 07:43 PM
Abstract
This paper discusses what internal or external factors impact a company’s stock prices. Stock price is dependent on the company, which is dependent on its environment, which includes its customer base, its industry, the general economy and the political climate.
Keywords: stock price, stock, inflation, high-level manager, economy, political climate
DB 2 - STOCK PRICE PERCEIVED VALUE
The stock market is the major place where stocks are traded and prices are determined by many different conditions and variables. Stock price is dependent on the company, which is dependent on its environment, which includes its customer base, its industry, the general economy and the political climate (Mladjenovic, 2013).
The Company
The company financials make up the largest portion of the stock price with the following ratio’s; P/E (price to earnings ratio), PSR (price to sales ratio), ROE (return on equity), earning growth, and debt to asset ratio.
- Earnings, this number should be 10% higher than the year before.
- Sales, this number should be higher than the year before
- Debit, this number should be equal to or lower than the year before and should be lower than the assets of the company
- Equity, this number should be higher than the year before (Mladjenovic, 2013).
If a company is not making money then the stock price should be falling, while the company produces profits the price should remain constant or be on the rise based on the P/E ratio. Investors in a company should at the following to determine if investing in the company is worthwhile.
High-Level Managers
Stock based rewards are often used to motivate high-level managers to take actions to increase the stock price of the firm. Numerous constraints may weaken the perceived link between individual effort and stock price appreciation for many recipients. The recognition of moral hazards in stock based rewards has resulted in numerous changes to U.S. accounting policies’ and how executive pay is...
