Can a nominal financial result and a nominal value of return on equity constitute a base for an assessment of effectiveness? Testing a research hypothesis

Justyna Franc-Dabrowska

International Journal of Electronic Finance, 2008, vol. 2, issue 3, 348-359

Abstract: The conducted researches indicate explicitly that the assessment of the enterprise on the basis of the nominal value of the financial result and the nominal return on equity can lead to false financial decisions. In economies characterised by high inflation rates, financial results and the return on equity should not be treated as indisputable criteria of the financial situation of companies. An increase in profit driven by inflation should be considered as well; in some extreme situations, the division of such inflationary profit may lead to bankruptcy. This research is the first of this kind of analysis of agricultural companies in Poland.

Keywords: nominal financial results; equity capital depreciation; e-finance; electronic finance; return on equity; inflation rates; agriculture; Poland; profit increase. (search for similar items in EconPapers)
Date: 2008
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Persistent link: https://EconPapers.repec.org/RePEc:ids:ijelfi:v:2:y:2008:i:3:p:348-359

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