The Impact of Book Value to Market Value Ratio and the Firm Size on the Profitability of the Common Stock in the Active Firms of Sugar Industry Accepted in Tehran Stock Exchange

Abstract

Investors drive their cash resources to participate in production only if they are assured that return on investment is high and also their investment risk is low .Thus, investors always look for certain tools for evaluating their stock in securities exchange .This investigation introduces the relation between BE/ME, firm size and stock profitability in order to use them as tools of stock assessment if there is a relation. The Fama & French model has been used for accomplishing this paper. The research method in this paper is correlation method and the population is the active firms in sugar industry accepted in Tehran Stock Exchange during 1382-1384. The information was gathered through financial reports existing in Tehran exchange stock library, and the correlation test has been used for testing the hypotheses. The research results indicate that there isn’t a significant relation between the book value ratio to market value ratio, and the firm size with stock profitability in active firms in sugar industry accepted in Tehran Stock Exchange.

Keywords

• book value to market value ratio
• firm size
• stock profitability