This paper is reproduced at the University of Vaasa in the electronic format with the permission of The Finnish Journal of Business Economics. Copyright (c) 1994 by The Finnish Journal of Business Economics and the authors.
CONTENTS
1.
Introduction
2.
Basic Properties of Ratios
2.1. Functional Form of Financial Ratios
2.2. Distributional Characteristics of Financial Ratios
2.3. Classification of Financial Ratios
2.3.1. Pragmatical Empiricism
2.3.2. Deductive Approach
2.3.3. Inductive Approach
2.3.4. Confirmatory Approach
3.
Measurement of Profitability and Financial Ratios
3.1. ARR vs IRR
3.2. Estimating the IRR from Financial Statements
3.3.Estimating the IRR from the Cash Recovery Rate
4.
Conclusions
References Section 2.1
References Section 2.2
References Section 2.3
References Section 3
This paper is also downloadable as a single zipped file by ftp as farewa12.zip
Please use the following reference to this publication: Salmi, T. and Martikainen, T. (1994), "A review of the theoretical and empirical basis of financial ratio analysis", The Finnish Journal of Business Economics 43:4, 426-448. Also available from World Wide Web: <URL:http://www.uwasa.fi/~ts/ejre/ejre.html>.
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