EXAMINATION AND COMPARISON OF THE PROFITABILITY OF A COMPANY IN TWO DIFFERENT ACCOUNTING ENVIRONMENTS

Alexandra Szekeres () and Mirjam Hamad ()
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Alexandra Szekeres: PhD Student (Department of Accounting, Institute of Accounting and Finance, Faculty of Economics and Business), Debrecen, Hungary
Mirjam Hamad: PhD Student (Department of Financial, Institute of Accounting and Finance, Faculty of Economics and Business), Debrecen, Hungary

Annals of Faculty of Economics, 2020, vol. 1, issue 1, 305-313

Abstract: The primary goal of the present research is to examine the profitability of companies that have transitioned to IFRS in the year of transition. This provides an opportunity to compare the profitability of a given company in the system of IFRS and on the basis of the data of the annual statement prepared in accordance with the Hungarian accounting rules. In the scope of the literature review and material and method chapters, the method of calculating the applied profitability indicators and the economic content of the indicators are presented. In addition, the source of the annual statements containing the data used for the study is described. In the scope of the research, it is hoped to be highlighted how different results can be presented in terms of profitability, using the data of two annual statements prepared on the basis of two different accounting systems. For the study, the Magyar Telekom Telecommunications Plc was selected, which switched to IFRS in 2017. The profitability of Telekom Plc. was examined using the return on sales (ROS), return on assets (ROA), and return on equity (ROE) profitability ratios. Simultaneously with the presentation of the profitability indicators, the factors influencing the value of each profitability indicator were described. In addition, the accounting specificities of the factors influencing profitability indicators in the system of IFRS and in the Hungarian accounting regulations were highlighted. In the scope of the present study, the focus was on the causal relationships of each difference. As a result of the research, it can be clearly stated that the profitability indicators calculated on the basis of the data of the annual report prepared in accordance with the requirements of IFRS are higher, so a more favorable profitability situation can be detected than in the Hungarian accounting environment. In the conclusion chapter, the results of the study and the drawn conclusions are briefly summarized.

Keywords: IFRS; Hungarian accounting; profitability; transition; IFRS 1 standard (search for similar items in EconPapers)
JEL-codes: M4 (search for similar items in EconPapers)
Date: 2020
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