THE ROLE OF PROFITABILITY RATES AND PROFIT MARGINS IN ASSESSING THE COMPANY'S FINANCIAL PERFORMANCE

Caruntu Genu Alexandru
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Caruntu Genu Alexandru: CONSTANTIN BRANCUSI UNIVERSITY OF TARGU JIU

Annals - Economy Series, 2019, vol. 1, 137-142

Abstract: At company level, business performance analysis plays a pivotal role in establishing the economic and financial strategy and with the help of post-factum analysis based on certain variables, known also with a system of profitability indicators and a well-structured profit margin, with a high practical relevance, company management can make decisions whose results provide significant financial resources for the company's future development. For the assessment of financial performance, we used a system of indicators of practical relevance and this study is based on profit and loss account data so that financial decisions from the perspective of shareholders and creditors are fully understood and well justified. Regardless of the object of activity, a company to grow and survive must be cost-effective and create surplus value in order to be able to reward direct or indirect participants to the economic circuit. Profitability means comparing the capital invested by those who have available funds with the results obtained. If the results obtained in the economic process are in line with the expectations of the investors, then we can say that the company's current management has made the right financial decisions based on the accounting data and the financial indicators of performance appraisal.

Keywords: return; profitability; efficiency; economic results (search for similar items in EconPapers)
Date: 2019
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