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About some difficulties with interpreting and measuring corporate performance

Author

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  • Julia

    (University of Gdańsk)

Abstract

Corporate performance constitutes one of the most important issues of both theory and practice in many areas of economics. The paper deals with the problem of multiplexity of corporate performance and the diversity of ways in which the term is interpreted in the literature. It also attempts to formulate a versatile definition, while organising the discrepancies in this area. Therefore, the way corporate performance is understood in the theory and practice of industrial economics was compared with the approach applied in corporate finance. The difficulties in defining corporate performance unambiguously result in a number of problems with measuring it and, as a result with conducting a fully objective and reliable evaluation of an economic entity. These problems also result from the imperfections of financial ratios as instruments used for measuring and characterising corporate performance. The study presents the idea of financial ratios and their main classification systems, as well as features the most important limitations of their application.

Suggested Citation

  • Julia, 2011. "About some difficulties with interpreting and measuring corporate performance," Bank i Kredyt, Narodowy Bank Polski, vol. 42(5), pages 41-60.
  • Handle: RePEc:nbp:nbpbik:v:42:y:2011:i:5:p:41-60
    as

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    File URL: http://www.bankikredyt.nbp.pl/content/2011/05/bik_05_2011_02_art.pdf
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    References listed on IDEAS

    as
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    More about this item

    Keywords

    corporate performace; industrial organisation; corporate finance; financial ratios;

    JEL classification:

    • G30 - Financial Economics - - Corporate Finance and Governance - - - General
    • L25 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Performance

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