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INTERNATIONAL JOURNAL OF MATHEMATICAL MODELS AND METHODS IN APPLIED SCIENCES The Correlation between the Return on Assets and the Measures of Financial Balance for Romanian

By Marian Siminica, Daniel Circiumaru and Dalia Simion


Abstract—The paper studies the statistical correlation between the return on assets and some measures of financial balance. The research relies on the assumptions that the financial balance influences most of the indicators of performances of a company. Therefore, we chose the return on assets as dependent variable, as it represents the final result of the company’s business. As independent variables, meaning measures that point out the financial balance, we selected 24 indicators. All these indicators were calculated for 40 Romanian companies listed on Bucharest Stock Exchange and included a period of 4 years between 2007 and 2010. The data required to calculate these indicators were extracted from the annual financial statements of these companies. The study includes two years of economic growth for Romania (2007 and 2008) and two of downturn (2009 and 2010). It is thus expected that most indicators analyzed to worsen in the past two years. We concluded, at the end of research, that the profitability of the Romanian firms declined as a result of the economic crisis. Before crisis (2007) it was significantly influenced by the financial structure and the financial balance. After the crisis, the importance of indicators emphasizing the business administration (as profit margin and rates of turnover) increased, but also the importance of the random external factors, uncontrollable by the management. Keywords—return on assets, financial balance, economic crisis, Pearson coefficient, regression model. T I

Year: 2013
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