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Measuring Financial Performance: Financial Ratios Vs. Economic Value Added

Author

Listed:
  • Mihaela Brindușa TUDOSE

    (Gheorghe Asachi Technical University of Iasi)

  • Valentina Diana RUSU

    (Alexandru Ioan Cuza” University of Iași)

  • Silvia AVASILCĂI

    (Gheorghe Asachi Technical University of Iasi)

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

Suggested Citation

  • Mihaela Brindușa TUDOSE & Valentina Diana RUSU & Silvia AVASILCĂI, 2020. "Measuring Financial Performance: Financial Ratios Vs. Economic Value Added," EURINT, Centre for European Studies, Alexandru Ioan Cuza University, vol. 7, pages 172-188.
    • Handle: RePEc:jes:eurint:y:2020:v:7:p:172-188
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    References listed on IDEAS

    as
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