 Profitability Ratios in Risk AnalysisAnna Rutkowska-Ziarko ()
A chapter in Contemporary Trends and Challenges in Finance, 2020, pp 77-88 from Springer Abstract: Abstract The aim of the study was to examine the correlation between the accounting profitability of the company and its rate of return on the capital market. In addition, betas and accounting betas were compared. The correlation between total variability and semi-variability of profitability ratios and rates of return was also analysed. The risk of a company was considered in variance and downside approaches. For calculating the downside risk, both the Bawa and Lindenberg formula and the Harlow and Rao formula were used. A positive correlation between the average value of the quarterly profitability ratios (ROA and ROE) and the average quarterly rates of return on the Warsaw Stock Exchange was identified. Similarly, companies with higher volatility and semi-volatility of the profitability ratios were simultaneously characterized by larger fluctuations in rates of return on the stock market. The correlations between market betas and accounting betas were statistically significant only in a downside approach. Accounting profitability had a greater effect on the rates on return and the risk for large and medium companies compared to small ones. Date: 2020 There are no downloads for this item, see the EconPapers FAQ for hints about obtaining it. Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:spr:prbchp:978-3-030-43078-8_7 Ordering information: This item can be ordered from DOI: 10.1007/978-3-030-43078-8_7 Access Statistics for this chapter More chapters in Springer Proceedings in Business and Economics from Springer |
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