The assessment of the financial performance based upon ratios. A comparative analysis
10.15660/AUOFMTE.2019-2.3462
M B Tudose, S Avasilcai
brindusa.tudose@gmail.com
Volume XXVIII, 2019/2
This study presents a comparative analysis model of the financial performance for two large companies operating in the field of production and trading of car parts. The model has as a starting point the assessment of the dynamics of liquidity, sales and profitability ratios (for a period of ten years). Based upon the preliminary results, the compound annual growth ratios were calculated and the trends (for the following seven years) were determined. All of these have made it possible to identify the performance profiles for the two companies. The study reveals that the financial performance was made more vulnerable by the insufficient cash availability (the cash reserves are not adequate for the current debt, assets and sales volume) and by the low levels of the recorded profit ratios (measured by the net profit margin, ROE and the return on shares). Although the cash and profit analysis reveals a cascade increase, the sales performance and return on equity ratios remain burdened by too high operating costs. To improve liquidity and profitability have been identified measures to meet the objective of ensuring the business sustainability.
ISSN 1583-0691, CNCSIS "Clasa B+"