Ratio Analysis Approach on Quality of Employees

Samuel P D Anantadjaya

The IUP Journal of Accounting Research and Audit Practices, 2011, vol. X, issue 3, 55-67

Abstract: In the field of finance and accounting, ratio analyses have become the preliminary concentration prior to progressing to any advanced discussion. The same is true for numerous studies on quality of employees. It may be relatively safe to say that the true connections between the two, if any, may have received minimal attention. Based on the perspective of the knowledge-based theory of the firm, this paper attempts to study the connection between the quality of employees and ratio analysis. Employees are seen as an increasingly important factor in handling the future market uncertainties and minimizing the organizations’ potential downturns. In preliminary literature, qualitative studies have been undertaken concerning the theory of the firm, including its development, as well as its implications to supply chain management, consumer behavior and customer satisfaction. For the purpose of the study, the quality of employees is measured only on basis of employees’ skills and abilities, and the ratio analyses are also limited to growth ratios (sales growth, net profit growth, and cost reduction). It is expected that the higher the quality of employees, the higher the growth ratios of any given firm. A cluster sampling method is used in this study to note the characteristics of small enterprises in certain locations. Aside from the qualitative analyses, which are based on interviews and field observations, a combination of statistical software packages are used as tools toward performing quantitative analysis. Research is conducted by gathering data from primary and secondary sources in service industries in Jakarta and Bandung. As stated, it is expected that such studies would reveal the significance of connections between quality of employees and ratio analysis. It is expected that such issues are mostly true for small/micro businesses.

Date: 2011
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