European Data: Historical Key Financial Ratios

Historical values of key financial data

Below is an excerpt from the book Business Analysis & Valuation IFRS Edition (Third Edition) and historical values of key financial ratios for publicly listed European companies.

It’s always good to have some historical values at hand when analyzing businesses, to have something to relate to. Emphasis added.

Historical patterns of ratios for European firms

To provide a benchmark for analysis, Table 5.10 reports historical values of the key ratios discussed in this chapter. These ratios are calculated using financial statement data for our sample of 7,015 publicly listed European companies. The table shows the median values of ROE, its key components, and the sustainable growth rate for each of the years 1992 to 2011, and the average for this 20-year period. The data in the table show that the average ROE during this period has been 9.1 percent, average return on business assets has been 7.8 percent, and the average spread between operating ROA and net borrowing costs after tax has been 3.9 percent. The average sustainable growth rate for European companies during this period has been 5.6 percent. Of course an individual company’s ratios might depart from these economy-wide averages for a number of reasons, including industry effects, company strategies, and management effectiveness. Nonetheless, the average values in the table serve as useful benchmarks in financial analysis.

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Disclosure: I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company or individual mentioned in this article. I have no positions in any stocks mentioned.

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