IDEAS home Printed from https://ideas.repec.org/a/ovi/oviste/vxxiiiy2023i2p856-860.html
   My bibliography  Save this article

The Importance of Financial Profitability on the Activity of a Company

Author

Listed:
  • Mircea-Iosif Rus

    (National Institute of Research & Development (INCD URBAN-INCERC), Cluj-Napoca Branch, Romania)

Abstract

The financial rate of return is a financial analysis indicator with an important role in assessing the economic and financial performance of an enterprise. Thus, if the economic rate of return expresses the return on invested capital only from the point of view of the operating activity, the financial rate of return does nothing more than to quantify the return on capital. If we start from the consideration that the financial rate of return expresses the efficiency of the equity capital of an enterprise, we realize that it has a major importance for the shareholders of that enterprise because they can see the effect of the investments made in that enterprise, if these investments are profitable and if they will still be interested in participating in the development of the enterprise, even through new investments. The purpose of the paper is to highlight the importance of financial returns in various situations, as exemplified, and the impact on both the company and the shareholders.

Suggested Citation

  • Mircea-Iosif Rus, 2023. "The Importance of Financial Profitability on the Activity of a Company," Ovidius University Annals, Economic Sciences Series, Ovidius University of Constantza, Faculty of Economic Sciences, vol. 0(2), pages 856-860, December.
    • Handle: RePEc:ovi:oviste:v:xxiii:y:2023:i:2:p:856-860
    as

    Download full text from publisher

    File URL: https://stec.univ-ovidius.ro/html/anale/ENG/wp-content/uploads/2024/02/34.pdf
    Download Restriction: no
    ---><---

    More about this item

    Keywords

    financial profitability; profit; capital; total assets; income;
    All these keywords.

    JEL classification:

    • D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • M41 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting - - - Accounting

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ovi:oviste:v:xxiii:y:2023:i:2:p:856-860. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Gheorghiu Gabriela (email available below). General contact details of provider: https://edirc.repec.org/data/feoviro.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.