IDEAS home Printed from https://ideas.repec.org/p/wop/scfiab/_005.html
   My bibliography  Save this paper

On the Classification of Financial Ratios; A Factor and Transformation Analysis of Accrual, Cash Flow, and Market-Based Ratios

Author

Listed:
  • Timo Salmi
  • Ilkka Virtanen
  • Paavo Yli-Olli

    (University of Vaasa, Department of Accounting and Business Finance)

Abstract

Factor and transformation analysis are used to find stable categories of financial ratios, and to test hypotheses concerning accrual ratios, cash flow ratios, and market-based ratios. Six stable factors are observed for Finnish data covering 1974-84. Contrary to expectations market-based ratios disperse widely. Cash flow ratios show strong internal cohesion and stability as expected. The expected dichotomy of accrual ratios into dynamic performance and static financial standing measures gets some support. The conventional text-book classification into profitability, liquidity, solvency, and turnover measures does not get direct support. Results on the interdependence of firm sizes and security betas is supported. Importance of measuring growth in financial statement analysis is also supported.

Suggested Citation

  • Timo Salmi & Ilkka Virtanen & Paavo Yli-Olli, "undated". "On the Classification of Financial Ratios; A Factor and Transformation Analysis of Accrual, Cash Flow, and Market-Based Ratios," News Group _005, Sci.Finance.Abstract.
    • Handle: RePEc:wop:scfiab:_005
    as

    Download full text from publisher

    File URL: http://www.uwasa.fi/~ts/sera/
    Download Restriction: no
    ---><---

    More about this item

    Keywords

    Financial ratios; financial statement analysis; classification of financial ratios; stability of financial ratios; cash flows; market- based ratios; profitability; operating leverage; defensive interval measure; size and beta; growth; factor analysis; transformation analysis.;
    All these keywords.

    JEL classification:

    • M49 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting - - - Other

    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:wop:scfiab:_005. 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: Thomas Krichel (email available below). General contact details of provider: .

    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.