INFLUENCE OF FINANCIAL RATIOS ON STOCK VALUATION OF COMPANIES LISTED ON THE STOCK EXCHANGE OF THAILAND

Abstract

Amidst diverse financial signals and inconsistent findings in prior research, this study aims to analyze the influence of key financial ratios on the stock valuation of companies listed on the Stock Exchange of Thailand (SET). Utilizing secondary data from a total of 464 companies from 2021 to 2023, sourced from the SETSMART database, the study employs multiple linear regression analysis. The findings reveal that return on assets (ROA) has a statistically significant positive influence on all three valuation metrics (price-to-book value, book value, and dividend yield). Meanwhile, gross profit margin (GPM) exerts a significant negative influence on dividend yield. In contrast, net profit margin (NPM) and the cash flow to profitability (CFP) ratio were found to have no influence on stock valuation. This finding suggests that ROA is the sole reliable indicator, likely because it best reflects the efficiency of using assets to generate profit. Conversely, the lack of influence from crucial ratios like NPM and CFP may indicate that investors in Thai capital market greater emphasis on other factors, such as future growth prospects, news, or corporate governance, in contemporary stock valuation.