The Selection of Economic Indicators for Measuring a Company’s Long-term Performance
Šiška Ladislav, Lízalová Lenka
performance, financial analysis, measurement
This article is a part fulfillment of the research project No. 402/09/2057 financed by the Czech Science Foundation with the purpose of identifying the impact of intangible assets on the performance of companies. The article focuses on searching for indicators that are suitable for measuring the long-term performance of companies. These indicators were identified from literature reviews and then tested on a three-year series of accounting data, which had been published in the financial statements of four thousand companies with more than 20 full-time employees. The cluster analysis served as a tool for verifying the correspondence in the evaluation of a company’s performance expressed by the various indicators. Two sets of optimal indicators were found – indicators of profitability and indicators of growth. Hence, this study recommends Return on Assets (ROA) and assets growth, alternatively risk adjusted ROS and sales growth.
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