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Performance ratios for managerial decision‐making in a growing firm

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  • Nina Ponikvar
  • Maks Tajnikar
  • Ksenja Pušnik

Abstract

This paper investigates the impact of firms’ growth rate on various financial and non‐financial performance ratios. The study tests the hypothesis that variations in growth rates across firms relate to differences in the values of ratios of profitability, liquidity, current assets, and solvency, as well as the break‐even point, revenue per employee, average costs, labour costs, capital costs, capacity utilization, productivity and efficiency. In order to estimate the impact of growth on financial and non‐financial indicators while also accounting for unobservable individual effects of each firm, the study assesses several two‐way fixed effect panel models with regression analysis. Authors show that knowing the impact of growth rates on financial and non‐financial ratios gives managers of growing firms additional relevant information for making business decisions.

Suggested Citation

  • Nina Ponikvar & Maks Tajnikar & Ksenja Pušnik, 2009. "Performance ratios for managerial decision‐making in a growing firm," Journal of Business Economics and Management, Taylor & Francis Journals, vol. 10(2), pages 109-120, February.
    • Handle: RePEc:taf:jbemgt:v:10:y:2009:i:2:p:109-120
    DOI: 10.3846/1611-1699.2009.10.109-120
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    References listed on IDEAS

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    7. Deyanira Bernal Dom¨ªnguez & Mar¨ªa Luisa Saavedra Garc¨ªa & Lydia Mar¨ªa L¨®pez Barraza, 2014. "Financial Analysis Management of Companies in a Region of Mexico: the Need of a Financial Ratios Annual Directory," Review of Economics & Finance, Better Advances Press, Canada, vol. 4, pages 64-78, August.

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