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Financial Diagnosis Of Stocks

Author

Listed:
  • SUCIU GHEORGHE

    (“DIMITRIE CANTEMIR” CHRISTIAN UNIVERSITY BRASOV)

  • BARSAN PIPU-NICOLAE

    (“DIMITRIE CANTEMIR” CHRISTIAN UNIVERSITY BRASOV)

Abstract

Financial diagnosis is a part of a company’s general diagnosis. The role of the financial diagnosis is to establish the situation of the company at a given time, to see if it is viable, to help the decision-makers to take the best measures to continue or cease the activity, or to sell, buy or liquidate the company. Each entity is unique and arbitrarily applying some analysis models used by other companies can lead to significant errors. One cannot analyze in the same way a company that produces household products and a trade company. In the first one, the working capital must be positive, because permanent capitals must finance the fixed assets which have a high value, and the working capital will finance the operating cycle. In case of a trade company, a negative working capital might represent a positive activity, because the duration of the operating cycle is much shorter, and short term sources can also finance the company’s tangible assets.

Suggested Citation

  • Suciu Gheorghe & Barsan Pipu-Nicolae, 2014. "Financial Diagnosis Of Stocks," Annals - Economy Series, Constantin Brancusi University, Faculty of Economics, vol. 6, pages 60-68, December.
    • Handle: RePEc:cbu:jrnlec:y:2014:v:6:p:60-68
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