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Analysis Model For Return On Capital Employed

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  • BURJA CAMELIA

    (1 DECEMBRIE 1918 UNIVERSITY OF ALBA IULIA)

Abstract

At the microeconomic level, the appreciation of the capitals’ profitability is a very complex action which is of interest for stakeholders. This study has as main purpose to extend the traditional analysis model for the capitals’ profitability, based on the ratio “Return on capital employed”. In line with it the objectives of this work aim the identification of factors that exert an influence on the capital’s profitability utilized by a company and the measurement of their contribution in the manifestation of the phenomenon. The proposed analysis model is validated on the use case of a representative company from the agricultural sector. The results obtained reveal that in a company there are some factors which can act positively on the capitals’ profitability: capital turnover, sales efficiency, increase the share of sales in the total revenues, improvement of the expenses’ efficiency. The findings are useful both for the decisionmaking factors in substantiating the economic strategies and for the capital owners who are interested in efficiency of their investments.

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Bibliographic Info

Article provided by Constantin Brancusi University, Faculty of Economics in its journal Constatin Brancusi University of Targu Jiu Annals - Economy Series.

Volume (Year): 1 (2013)
Issue (Month): (February)
Pages: 82-87

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Handle: RePEc:cbu:jrnlec:y:2013:v:1:p:82-87

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Keywords: profitability; capital employed; profitability ratios; financial analysis;

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  1. Ph D Professor Aslau Titus & Ph D Lecturer Cuc Lavinia Denisia, 2010. "Assigning Strategic Objectives and Managing Profitability Ratios," Ovidius University Annals, Economic Sciences Series, Ovidius University of Constantza, Faculty of Economic Sciences, Ovidius University of Constantza, Faculty of Economic Sciences, vol. 0(1), pages 1422-1425, May.
  2. S C Bardia, 2008. "Evaluation of Financial Performance: A Dialectics," The IUP Journal of Accounting Research and Audit Practices, IUP Publications, IUP Publications, vol. 0(1), pages 36-49, January.
  3. Imran Omer Chhapra & Nousheen Abbas Naqvi, 2010. "Relationship between Efficiency Level of Working Capital Management and Profitability of Firms in the Textile Sector of Pakistan," Indus Journal of Management & Social Science (IJMSS), Department of Business Administration, Department of Business Administration, vol. 4(1), pages 30-42, December.
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