MEASURING FINANCIAL PERFORMANCE: FINANCIAL RATIOS VS. ECONOMIC VALUE ADDED

Mihaela Tudose (), Valentina Rusu and Silvia Avasilcăi ()
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Silvia Avasilcăi: Gheorghe Asachi Technical University of Iasi

EURINT, 2020, vol. 7, 172-188

Abstract: The study presents a model of comparative analysis of financial performance based on two categories of instruments and evaluates the interdependencies between different performance measures. Based on the information gathered from secondary sources, we determined, interpreted and dynamically analysed the following indicators: return on assets, return on equity, degree of global indebtedness, current and quick liquidity and economic added value. The obtained results allowed the shaping of two performance profiles on the basis of which the ranking of the analysed companies was made. In order to identify the interdependencies between the different performance measures, we performed a first regression analysis which indicated that the company's ability to create added economic value depends on achieving high rates of economic profitability. Because in the analysed period there were major variations of the macroeconomic indicators, we performed a second regression analysis which indicated that the economic growth rate positively influences the two rates of return

Keywords: financial performance; ratios; economic value added; companies (search for similar items in EconPapers)
Date: 2020
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Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:jes:eurint:y:2020:v:7:p:172-188

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