Influence of Growth, Capital Structure, Profitability, and Size on FTSE 100 Enterprise Value

Abstract

This study aims to examine the influence of growth, capital structure, and profitability on enterprise value (EV) using data from the FTSE 100 companies. It seeks to identify the pivotal elements related to the EV and understand how they interact with each other. The study collects data from the annual reports of FTSE 100 companies for the period of 2019–2023. Regression analyses are conducted to examine the relationships between the variables after robust checks. The analysis reveals that capital structure and business size have a major impact on EV, with larger firms and higher levels of debt financing associated with higher EVs. However, there is no significant relationship between growth rate and EV. The impact of profitability on EV is mixed, with return on assets (ROA) showing a weak negative correlation and return on equity (ROE) showing a weak positive correlation. By offering particular insights into the factors that determine EV within the FTSE 100, this study fills in the gaps in the body of previous research. It offers valuable contributions to both academic research and practical applications by exploring the nuanced dynamics of the connections between EV and growth, capital structure, and profitability.