Accounting in three dimensions: a case for momentum revisited

Eric Melse

Journal of Risk Finance, 2008, vol. 9, issue 4, 334-350

Abstract: Purpose - This paper aims to extend an earlier analysis of the profitability of an individual firm operating in the professional services industry from the perspective of the triple‐entry framework of the momentum accounting theory of Yuji Ijiri. Design/methodology/approach - The paper presents a “common‐size‐format” model of balance‐sheet momentum, an approach typical of financial statements' mathematical analysis. Findings - Common‐size‐format momentum ratios offer an alternative measurement of (the change of) business performance. They model stabilizing phenomena that might develop very differently from ratios like return on total assets or return on equity and thus provide important informational signals to the analyst of financial statements. The common‐size‐format ratio of net wealth momentum herein discussed is proposed as a supplemental measurement for business performance analysis. Originality/value - The paper discusses a new method for performance measurement and risk analysis.

Keywords: Accounting; Accounting theory; Performance measures; Risk analysis (search for similar items in EconPapers)
Date: 2008
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Persistent link: https://EconPapers.repec.org/RePEc:eme:jrfpps:15265940810895007

DOI: 10.1108/15265940810895007

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