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ADVANTAGES AND LIMITATIONS OF THE FINANCIAL RATIOS USED IN THE FINANCIAL DIAGNOSIS OF THE ENTERPRISE

Mihaela Gadoiu ()
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Mihaela Gadoiu: Faculty of Economics, University of Pitesti, Romania

Scientific Bulletin - Economic Sciences, 2014, vol. 13, issue 2, 87-95

Abstract: This paper points out the importance of the financial ratios used in financial diagnosis. Starting from the idea that the financial theory and practice use too many indicators to achieve the financial diagnosis of a company, and that most of the instruments used are relevant only under specific and limited conditions, we examined the advantages and limitations of the financial ratios. The research method used in this paper involves on the one hand, the theoretical substantiation of the specific notions used in financial diagnosis of an enterprise, and on the other hand their transposition by appealing to an example of the use of a company.

Keywords: financial diagnosis; financial ratios; performance. (search for similar items in EconPapers)
JEL-codes: G11 G12 L21 (search for similar items in EconPapers)
Date: 2014
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