The evaluation of the companies financial performance through the rates of return

Nicolae Balteș, Alexandra-Gabriela-Maria Dragoe and Sebastian-Ilie Dragoe
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Nicolae Balteș: “Lucian Blaga” University, Sibiu, Romania
Alexandra-Gabriela-Maria Dragoe: “Lucian Blaga” University, Sibiu, Romania
Sebastian-Ilie Dragoe: “Lucian Blaga” University, Sibiu, Romania

Theoretical and Applied Economics, 2016, vol. XXIII, issue Special(I), 84-95

Abstract: The paper presents both theoretical and practical the relationship between the Price to Book Value (PBV), important in assessing the performance of the listed companies from the stock market and the Return on Assets (ROA). The study, conducted on the companies from the manufacturing industry in Romania, listed on the Bucharest Stock Exchange, during the period 2007-2014, leads to the conclusion that because of the economic and financial crisis that started in 2008, the values of the PBV and ROA indicators recorded a significant decrease, a shy tendency of recovering being noticed in the last two analyzed years. Through a simple linear regression, we researched the influence of the change of ROA on the value of the PBV for the companies included in the study. It was demonstrated a positive and intense correlation between the two variables, ROA’s fluctuations influencing the PBV 's evolution.

Keywords: Return on assets (ROA); Price-to-Book-Value (PBV); simple linear regression; correlation. (search for similar items in EconPapers)
Date: 2016
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Persistent link: https://EconPapers.repec.org/RePEc:agr:journl:v:xxiii:y:2016:i:special(i):p:84-95

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