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1 – 10 of over 57000Bruce L. Ahrendsen and Ani L. Katchova
The purpose of this research is to evaluate the financial performance measures calculated and reported by the Economic Resource Service (ERS) from Agricultural Resource Management…
Abstract
Purpose
The purpose of this research is to evaluate the financial performance measures calculated and reported by the Economic Resource Service (ERS) from Agricultural Resource Management Survey (ARMS) data. The evaluation includes the calculation method and the underlying assumptions used in obtaining the reported values. Recommendations for improving the information reported are proposed to ERS.
Design/methodology/approach
The financial measures calculated and reported are compared with those recommended by the Farm Financial Standards Council (FFSC). The underlying assumptions are identified by analyzing the software code used in calculating the values reported. The values reported by ERS are duplicated and alternative methods for calculating the financial performance measures are considered. The values obtained from the various calculation methods are compared and contrasted.
Findings
Recommendations for ERS include: calculate and report the financial measures recommended by FFSC, note values that are imputed, periodically update and validate assumptions used in calculating imputed values, review its policy for flagging estimates as statistically unreliable, report medians and other select percentiles, and consider reporting the percent of farm businesses that have values within critical zones.
Originality/value
A total of four methods for calculating financial performance measures are compared and contrasted. These are the aggregate mean, sample mean, sample median, and percentage of farm businesses with values in critical zones.
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Halimahton Borhan, Rozita Naina Mohamed and Nurnafisah Azmi
The purpose of this paper is to examine the impact of financial ratios on the financial performance of a chemical company: LyondellBasell Industries (LYB). Some selected ratios…
Abstract
Purpose
The purpose of this paper is to examine the impact of financial ratios on the financial performance of a chemical company: LyondellBasell Industries (LYB). Some selected ratios: current ratio (CR) and quick ratio (QR) represent the liquidity ratios, debt ratio (DR) and debt equity ratio (DTER) represent the leverage ratios, while operating profit margin (OPM) and net profit margin (NPM) represent the profitability ratios. LYB faced financial problems after its merger and the financial performance of the company shrank to negative due to the world financial crisis. However, this company has bounced back after a year and is now the world's third largest chemical company based on revenue.
Design/methodology/approach
The financial ratios were measured from 2004 to 2011, quarterly. A multiple regression model has been used and secondary data has been analyzed.
Findings
The results shows that CR, QR, DR and NPM have a positive relationship while DTER and OPM have a negative relationship with the company's financial performance. Among the six ratios, CR, DR and NPM show the highest significant impact on the company's performance.
Originality/value
This research paper contributed the result of the impact of financial ratios on the financial performance of a chemical company as the previous studies with this focus are hard to find and some of the sources are not specifically related to the topic.
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Carolin Schellhorn and Rajneesh Sharma
The purpose of this paper is to evaluate firm financial success across a broad range of performance measures and identify areas of the performance spectrum for which positive…
Abstract
Purpose
The purpose of this paper is to evaluate firm financial success across a broad range of performance measures and identify areas of the performance spectrum for which positive results were most difficult to achieve. Simultaneously, the authors identify the firms that most frequently ranked among the top five in terms of composite financial performance.
Design/methodology/approach
The dichotomous Rasch model was applied to 13 financial ratios for two industries for the years 2002‐2011. Of these ratios, the authors identify those that are consistent with the requirements of the Rasch model and suitable for ranking composite firm financial performance in each industry during the sample years. Ratio difficulty rankings are obtained, along with firm rankings reflecting managers' ability to achieve broad‐based financial success.
Findings
For the Foods and Aerospace/Defense industries during 2002‐2011, above average performance was most difficult to achieve in the areas of liquidity, financial leverage, and market valuation. Above average profitability and returns on investment seem to have been easier performance targets during this sample period. The authors also list the ticker symbols of firms with managers who consistently achieved top overall financial performance.
Research limitations/implications
The performance data for each industry and time period have to fit the requirements of the Rasch model. In addition, it must be possible to translate continuous metric readings into binary measures without losing relevant information. Future research might explore the use of more sophisticated Rasch models, measures of non‐financial firm performance dimensions, additional industries and time periods.
Practical implications
This research offers managers, investors and regulators a fresh perspective on the evaluation of firm financial performance and managerial ability.
Social implications
Rasch models are widely used in the human sciences. Application of this methodology to firms offers a more comprehensive view of firm performance and may reveal factors relevant to firm valuation that have previously been ignored, thus possibly impacting the allocation of capital across firms and industries.
Originality/value
To the authors' knowledge, this research represents a first attempt to apply the Rasch approach to an evaluation of managerial ability as reflected in a firm's overall financial performance.
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Anil K. Giri, Carrie Litkowski, Dipak Subedi and Tia M. McDonald
The purpose of this study is to examine how US farm sector performed in 2020, the first year of the pandemic. There were significant supply and demand shocks due to the pandemic…
Abstract
Purpose
The purpose of this study is to examine how US farm sector performed in 2020, the first year of the pandemic. There were significant supply and demand shocks due to the pandemic. Furthermore, there was significant fluctuation in commodity prices and record high government payments in 2020. This study aims to examine the performance and position of US farm sector (financially) to system (and global economy) wide shocks.
Design/methodology/approach
The authors examine 2020 values for farm sector financial ratios before and after the onset of the Coronavirus (COVID-19) pandemic using the data from the United States Department of Agriculture to understand the financial position and performance of the US farm sector.
Findings
The authors find solvency ratios (which are indicators of the sector's ability to repay financial liabilities via the sale of assets) worsened in 2020 relative to pre-pandemic expectations. Efficiency ratios (which evaluate the conversion of assets into production and revenue) and liquidity ratios (which are indicators of the availability of cash to cover debt payments) showed mixed outcomes for the realized results in 2020 relative to the pre-pandemic forecasts. Four profitability ratios were stronger in 2020 relative to pre-pandemic expectations. All solvency, liquidity and profitability ratios plus 2 out of 5 efficiency ratios for 2020 were weaker than their respective average ratios obtained from 2000 to 2019 data.
Originality/value
This research is one of the first papers to use financial ratios to examine how the US farm sector performed in 2020 compared to expectations prior to the pandemic.
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This study aims to examine the relationship between objective and subjective aspects of financial well-being, the role of family financial support and depression symptoms of…
Abstract
Purpose
This study aims to examine the relationship between objective and subjective aspects of financial well-being, the role of family financial support and depression symptoms of Chinese older adults.
Design/methodology/approach
This study used two waves (2015 and 2018) of the Harmonized China Health and Retirement Longitudinal Study. Two financial ratios: the expenditure-to-income ratio and the financial assets ratio, were used to measure the objective aspect of financial well-being. Perceived money management difficulty was employed to measure the subjective aspect of financial well-being. Depression symptoms were measured using the Center for Epidemiologic Studies Depression Scale (CES-D) score. Three analytical models, including an ordinary least squares (OLS) model, an OLS model controlling for lagged depression and a random effects model using panel data, were used to examine the relationships between the objective and subject aspects of financial well-being and depression.
Findings
The results from the three models showed consistent relationships: the expenditure-to-income ratio was a positive contributor, while the financial assets ratio was a negative contributor to depression of older adults in China. The robustness check using binary-coded financial ratio thresholds showed that reaching the suggested thresholds was negatively associated with depression. Perceived money management difficulty contributed positively to depression. The robustness check using the fixed effects model showed no significance of the two ratios, while perceived money management difficulty was positively associated with depression. The insignificance might be due to data limitation (limited waves or rare changes across waves).
Originality/value
The findings indicate that both objective and subjective financial well-being matters in relation to depression symptoms and, therefore, to the overall mental health of the Chinese elderly. Developments in public policies are needed to promote accessible financial services, assistance programs, mental health services and facilities for the older population in China.
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Chunhui (Maggie) Liu, Grace O'Farrell, Kwok‐Kee Wei and Lee J. Yao
Firms in different countries operate in different business environments and prepare financial statements following, by necessity, their own countries' accounting standards…
Abstract
Purpose
Firms in different countries operate in different business environments and prepare financial statements following, by necessity, their own countries' accounting standards. Benchmarks for assessing financial ratios of firms in different countries are likely to be different. In conducting financial ratio analyses, each country's unique cultural, business, financial, and regulatory characteristics have to be taken into consideration, for these external factors may exert significant effects on measurements of financial data. This study aims to investigate challenges in comparing financial ratios between Japanese firms and Chinese firms.
Design/methodology/approach
This study compares ten major financial ratios of 75 Chinese firms with financial ratios of 75 matched sample Japanese firms to determine if a common benchmark for each of the financial ratios can be applied to firms in both countries.
Findings
The results show significant differences in liquidity, solvency, and activity ratios between firms from these two countries. Further examination of differences in accounting standards, economic, and institutional environments between these two countries suggests that these external factors have significant effects on financial ratios and may have contributed to the observed differences.
Originality/value
This study is among the first to investigate the comparability of ratios between Japanese firms and Chinese firms to uncover potential challenges and warn investors of such challenges.
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Emre Çelik and Kerem Yavuz Arslanli
This paper aims to determine the specific financial ratio's effects on market value and return of assets for Turkish real estate investment trusts (REITs) traded at Istanbul Stock…
Abstract
Purpose
This paper aims to determine the specific financial ratio's effects on market value and return of assets for Turkish real estate investment trusts (REITs) traded at Istanbul Stock Exchange (ISE). The paper intends to define liquidity ratios, financial structure ratios, return ratios and stock performance ratios related to market value and return of asset.
Design/methodology/approach
The study includes 17 REITs traded in ISE. The period of study is specified as the year from 2009 to 2018. Panel data analysis is applied in this study. Dependent variables are current market value and return of assets, independent variables are 12 financial ratios, which are considered to explain the model significantly. These ratios will be calculated from audited year-end balance sheets for specific periods throughout at least ten years as time series. Two different models and hypotheses have been established to identify the financial ratios that affect the market value and return of assets for REITs.
Findings
According to the results, long-term financial loans/total assets, return of equity and working capital ratio are negatively correlated with market value, while market value/book value and total assets are correlated positively. On the other hand, market value/book value ratio, price/earning ratio, long-term financial loans/total assets and earnings per share are correlated with return of assets. REITs have high levels of financial leverage, especially in foreign currency. The striking point is that REITs hardly ever do not use financial derivatives to hedge their position again currency and interest rate risk. This approach makes the financial structures of REITs vulnerable and fragile against market volatility.
Originality/value
In Turkey, as an example of an emerging market, financial borrowing does not increase the return rates and market value for REITs due to market's idiosyncratic properties. This finding provides substantial insight into how the debt and equity allocation of Turkish REITs should be structured. Also, it has been observed that forward-looking expectations are considered more than the current situation in the market.
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Dennis Caplan and Saurav K. Dutta
Recent public policy initiatives seek greater transparency in financial reporting through an honest, balanced and thorough management discussion of company performance in the…
Abstract
Recent public policy initiatives seek greater transparency in financial reporting through an honest, balanced and thorough management discussion of company performance in the annual report. Management’s discussion invariably includes key performance indicators, such as financial ratios, relevant to external stakeholders. We model the impact of accounting estimates, assumptions, choices and errors on the risk of misleading financial ratios. This framework is illustrated through good and bad examples of financial reporting practices and by simulation of financial data of public companies. We provide a structured approach to inform policymakers, auditors and other stakeholders of the incremental financial reporting risk that accompanies current regulatory efforts.
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Cleopatra Grizzle, Margaret F. Sloan and Mirae Kim
Although operating reserves can aid nonprofit organizations in alleviating periods of fiscal stress, they are not widely used. This study examines organizational factors that…
Abstract
ABSTRACT
Although operating reserves can aid nonprofit organizations in alleviating periods of fiscal stress, they are not widely used. This study examines organizational factors that impact the level of operating reserves in nonprofit organizations. It also explores the relationship of operating reserves with organizational demographics and financial health variables using a six-year (1998-2003) unbalanced panel regression model containing 460,437 observations. Findings demonstrate a positive relationship between operating reserves and administration ratio, profit margin, operating margin, and organization age. Conversely, the size of operating reserves is negatively related to leverage ratio, donations, and organization size. Revenue diversification, however, shows a mixed relationship with operating reserves among different types of nonprofit indicating complexity in risk-reducing strategy. This study contributes to understanding factors relevant to the presence, or absence, of nonprofit operating reserves.
Lan Thi Mai Nguyen and Phi Hoang Dinh
The authors investigate whether firms can ensure their financial stability during the coronavirus disease 2019 (COVID-19) pandemic by having ex-ante risk management.
Abstract
Purpose
The authors investigate whether firms can ensure their financial stability during the coronavirus disease 2019 (COVID-19) pandemic by having ex-ante risk management.
Design/methodology/approach
The authors study 279 Vietnamese listed firms by investigating their disclosure of risk awareness and risk management tool(s) in the 2019 annual reports. The authors then examine whether prior risk awareness and adoption of risk management tool(s) can enhance the firms' financial ratios during the COVID-19 pandemic.
Findings
The authors find that firms that disclose their risk management tool(s) in the 2019 annual reports have better asset utilization and higher liquidity during the COVID-19 pandemic than the others. However, firms that simply express their risk awareness exert no stronger financial stability. In addition, the authors document that debt management is the most popular and most effective tool to ensure firms' financial stability during the crisis.
Originality/value
The study highlights the need for ex-ante risk management for future pandemics. The authors also suggest that stakeholders can rely on the degree of risk management tool utilization to evaluate the financial stability of firms.
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