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The Correlation Between The Autonomy Ratio And The Return On Equity

Author

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  • Daniel BRÎNDESCU – OLARIU

    (Universitatea de Vest din Timișoara)

Abstract

Previous studies conducted over companies from the Timis County indicate a negative correlation between the autonomy ratio and the bankruptcy risk. At the same time, high values of the autonomy ratio could have a negative effect on the return on equity. The current study aims to evaluate the relationship between the autonomy ratio and the return on equity. The target population included all the companies from the Timis County that have submitted financial statements to the fiscal authorities for the period 2007 – 2010, reporting positive equity and annual sales of over 10,000 lei. The research has thus employed 33,064 yearly financial statements. Considering the relationship between the autonomy ratio and the bankruptcy risk as well as the relationship between the autonomy ratio and the return on equity, it is concluded that the optimum value of the autonomy ratio is placed within the interval [50%; 100%].

Suggested Citation

  • Daniel BRÎNDESCU – OLARIU, 2014. "The Correlation Between The Autonomy Ratio And The Return On Equity," Management Intercultural, Romanian Foundation for Business Intelligence, Editorial Department, issue 31, pages 407-414, November.
    • Handle: RePEc:cmj:interc:y:2014:i:31:p:407-414
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    Citations

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    Cited by:

    1. Daniel BRINDESCU-OLARIU, 2015. "The Potential Of The Debt Ratio In The Prediction Of Corporate Bankruptcy," Journal of Public Administration, Finance and Law, Alexandru Ioan Cuza University, Faculty of Economics and Business Administration, vol. 0(Special i), pages 37-45, September.
    2. Daniel BRÎNDESCU – OLARIU, 2014. "Labor Productivity As A Factor For Bankruptcy Prediction," SEA - Practical Application of Science, Romanian Foundation for Business Intelligence, Editorial Department, issue 6, pages 33-36, December.
    3. Daniel Brîndescu Olariu, 2016. "Bankruptcy Prediction Based on the Autonomy Ratio," EuroEconomica, Danubius University of Galati, issue 2(35), pages 78-92, November.

    More about this item

    Keywords

    Autonomy ratio; Return on equity; Bankruptcy; Financial statements; Benchmark; Financial analysis;
    All these keywords.

    JEL classification:

    • G33 - Financial Economics - - Corporate Finance and Governance - - - Bankruptcy; Liquidation
    • M10 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - General

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