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The evaluation of the companies financial performance through the rates of return

Author

Listed:
  • Nicolae BALTEȘ

    (“Lucian Blaga” University, Sibiu, Romania)

  • Alexandra-Gabriela-Maria DRAGOE

    (“Lucian Blaga” University, Sibiu, Romania)

  • Sebastian-Ilie DRAGOE

    (“Lucian Blaga” University, Sibiu, Romania)

Abstract

The paper presents both theoretical and practical the relationship between the Price to Book Value (PBV), important in assessing the performance of the listed companies from the stock market and the Return on Assets (ROA). The study, conducted on the companies from the manufacturing industry in Romania, listed on the Bucharest Stock Exchange, during the period 2007-2014, leads to the conclusion that because of the economic and financial crisis that started in 2008, the values of the PBV and ROA indicators recorded a significant decrease, a shy tendency of recovering being noticed in the last two analyzed years. Through a simple linear regression, we researched the influence of the change of ROA on the value of the PBV for the companies included in the study. It was demonstrated a positive and intense correlation between the two variables, ROA’s fluctuations influencing the PBV 's evolution.

Suggested Citation

  • Nicolae BALTEȘ & Alexandra-Gabriela-Maria DRAGOE & Sebastian-Ilie DRAGOE, 2016. "The evaluation of the companies financial performance through the rates of return," Theoretical and Applied Economics, Asociatia Generala a Economistilor din Romania / Editura Economica, vol. 0(Special(I), pages 84-95.
    • Handle: RePEc:agr:journl:v:xxiii:y:2016:i:special(i):p:84-95
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    References listed on IDEAS

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