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Accounting in three dimensions: a case for momentum revisited


  • Eric Melse


Purpose - This paper aims to extend an earlier analysis of the profitability of an individual firm operating in the professional services industry from the perspective of the triple-entry framework of the momentum accounting theory of Yuji Ijiri. Design/methodology/approach - The paper presents a “common-size-format” model of balance-sheet momentum, an approach typical of financial statements' mathematical analysis. Findings - Common-size-format momentum ratios offer an alternative measurement of (the change of) business performance. They model stabilizing phenomena that might develop very differently from ratios like return on total assets or return on equity and thus provide important informational signals to the analyst of financial statements. The common-size-format ratio of net wealth momentum herein discussed is proposed as a supplemental measurement for business performance analysis. Originality/value - The paper discusses a new method for performance measurement and risk analysis.

Suggested Citation

  • Eric Melse, 2008. "Accounting in three dimensions: a case for momentum revisited," Journal of Risk Finance, Emerald Group Publishing, vol. 9(4), pages 334-350, August.
  • Handle: RePEc:eme:jrfpps:v:9:y:2008:i:4:p:334-350

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    References listed on IDEAS

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    4. Ijiri, Y., 1989. "Momentum Accounting And Triple-Entry Bookkeeping: Exploring The Dynamic Structure Of Accounting Measurements," GSIA Working Papers 88-89-35, Carnegie Mellon University, Tepper School of Business.
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    6. Ran Barniv & Mark Myring, 2006. "An International Analysis of Historical and Forecast Earnings in Accounting-Based Valuation Models," Journal of Business Finance & Accounting, Wiley Blackwell, vol. 33(7-8), pages 1087-1109.
    7. Collins, Daniel W. & Maydew, Edward L. & Weiss, Ira S., 1997. "Changes in the value-relevance of earnings and book values over the past forty years," Journal of Accounting and Economics, Elsevier, vol. 24(1), pages 39-67, December.
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