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Can a nominal financial result and a nominal value of return on equity constitute a base for an assessment of effectiveness? Testing a research hypothesis

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  • Justyna Franc-Dabrowska

Abstract

The conducted researches indicate explicitly that the assessment of the enterprise on the basis of the nominal value of the financial result and the nominal return on equity can lead to false financial decisions. In economies characterised by high inflation rates, financial results and the return on equity should not be treated as indisputable criteria of the financial situation of companies. An increase in profit driven by inflation should be considered as well; in some extreme situations, the division of such inflationary profit may lead to bankruptcy. This research is the first of this kind of analysis of agricultural companies in Poland.

Suggested Citation

  • Justyna Franc-Dabrowska, 2008. "Can a nominal financial result and a nominal value of return on equity constitute a base for an assessment of effectiveness? Testing a research hypothesis," International Journal of Electronic Finance, Inderscience Enterprises Ltd, vol. 2(3), pages 348-359.
    • Handle: RePEc:ids:ijelfi:v:2:y:2008:i:3:p:348-359
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