Comparison of the Price-Earnings Ratio (P/E Ratio) before and after the Use of Off-Balance Sheet Financing in Firms Listed in the Tehran Stock Exchange

The aim of this study was to compare price-earnings ratio of companies before and after the use of off- balance sheet financing in firms listed in the Tehran Stock Exchange. The research method was causal-comparative descriptive. The population was all the accepted companies in Tehran Stock Exchange (cars and car fragments, petrochemicals, petroleum products, cement, pharmaceutical, home and sugar appliances) between years of 2010 and 2014 that 87 companies were selected at random. Data were analyzed using independent t-test. Results showed that the average ratio of net profit to total assets (ROA) for companies which have used off-balance sheet financing had significant difference with the average ratio of net profit to total assets (ROA) for companies that did not use off-balance sheet. Other results showed that the average ratio of the book value of total debt to book value of total assets in companies after using off-balance sheet financing had significant statistical difference with the average ratio of the book value of total debt to book value of total assets before use of off-balance sheet financing. As well, the average ratio of stock price to earnings per share in the companies after the use of off-balance sheet financing had no significant difference with an average ratio of stock price to earnings per share before using off-balance sheet financing.