The influence of social media usage on the DuPont method of analysis

Jeppson, Nathan H.; Ruddy, John A.; Salerno, David F.

doi:10.1002/jcaf.22507

Cited by 7 publications

(7 citation statements)

References 26 publications

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“…A high value indicates a significant amount of profit available to cover the debt, but the ratio may also suggest that the firm is not using its debt effectively. According to Jeppson et al (2021), in the long term, the value of the indicator must be lower than 100%.…”

Section: Resultsmentioning

confidence: 99%

Has the COVID-19 pandemic affected the corporate financial performance? A case study of Slovak enterprises

Valaskova,

Gajdosikova,

Lazaroiu

2023

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Research background: The corporate debt situation can be considered a crucial factor influencing the future development of the financial performance of the firm. It is essential for every business entity to know its financial health, its strengths and weaknesses, and how its business has been affected by the COVID-19 pandemic and all the changes it has brought. Purpose of the article: The main aim of this paper is to explain and quantify the consequences of the COVID-19 pandemic, analyze changes in the growth of crucial determinants, and identify new trends in Slovak enterprises throughout the monitored period of 2018‒2021. Methods: Hence, a statistically significant difference between the individual indicators due to the period in which the firms achieved these values was determined using the Friedman test. It determined whether the average values of the financial indicators remained constant over the period under review (the years 2018 and 2019 are considered pre- COVID-19 years, while 2020 and 2021 are years when the globe was already being impacted by the outbreak of the COVID-19 pandemic) or whether the individual values of the indicators differed significantly. Findings & value added: Considering that there are statistically significant differences in the indicators of self-financing ratio, current indebtedness ratio, and equity leverage ratio in all monitored periods except for the years 2020 and 2021, where the average values of these debt indicators are the same, the results indicate that the COVID-19 pandemic also negatively impacted the indebtedness of Slovak enterprises. Although this research paper, focusing on the financial performance of the firms in the post-pandemic period, is pioneering in Slovakia, the biggest contribution of the study is the application of the latest information, which could help in more precise monitoring of corporate financial stability and debt policy during the current challenging period. The obtained results provide important universal guidelines for building financial strategies improving long-term financial resilience of enterprises.

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Section: Resultsmentioning

confidence: 99%

Has the COVID-19 pandemic affected the corporate financial performance? A case study of Slovak enterprises

Valaskova,

Gajdosikova,

Lazaroiu

2023

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“…Cash flow from operating activities includes the changes in working capital related to corporate activity in the form of cash conversion into short-term assets available to fund operating activities (Kuprina & Chernenko, 2018). Cash flow for operating activities of banks includes interest payments on loans to customers, loan payments, and returns on equity securities investments (Jeppson et al, 2016). The cash flowing from operating activities and net income generation is connected to working capital accounts, including receivables, prepayments, short-term obligations, and accrued expenses (Ross et al, 2013).…”

Section: B Cash Flow From Operating Activitiesmentioning

confidence: 99%

“…Hence, this cash flow comprises short-term credit channeling, current deposit revenues from customers, as well as cash receipts and disbursements for maturing interest, and loan principal repayments to increase annual profits and reduce liquidity risks. In addition, Jeppson et al (2016) elaborated that the cash outflow is often caused by costs for purchasing merchandise, paying employees, making government payments, paying interest, and paying supplies for other relevant expenses.…”

Section: B Cash Flow From Operating Activitiesmentioning

confidence: 99%

“…From an accounting standpoint, investing activities entail long-term asset acquisition, such as routing a loan and collecting it, as well as investing to buy and sell any productive assets that provide service for more than one year (Kieso et al, 2020). Banks borrow money throughout the fundraising process by issuing long-term debt securities, receiving cash as a source of liquidity, and then reinvesting the funds in long-term assets (Jeppson et al, 2016).…”

Section: Cash Flow From Investing Activitiesmentioning

confidence: 99%

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Cash Flows and Capital Adequacy Ratio of Indonesian Commercial Banks

Samryn,

Ismail,

Sudarmadji

et al. 2023

EJBMR

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This article examines the impact of partial Cash Flows from Operating Activities (CFO), Cash Flow from Investing Activities (CFI), and Cash Flow from Financing Activities (CFF) on the Capital Adequacy Ratio (CAR) of Indonesian commercial banks. The tests are conducted over a purposive population, sample, and unit of analysis of data from five years from 2009 to 2013 of the Big-Five commercial banks in the country. The period selection considered the banks’ response post-financial crisis in 2008. The classic assumption tests assumed that all data are valid for the simple regression to test each independent variable's correlation and effect on the dependent variable using EViewS econometric software. The test results show that all CF elements correlated negatively with CAR. The CFI shows a significant impact, while the CFO and CFF have insignificant implications on CAR. The conclusions imply that the parties should pay special attention to CFI, which significantly influences the CAR. This conclusion supports the CFI's central position as the source of long-term profit funded by the CFF. The finding indicated that post-crisis 2008, the Indonesian commercial banks improved their investment in long-term assets. The new long-term investment has not resulted in an additional cash flow and even depressed the net cash flow from investing activities. Given the necessity of banks to avoid idle funds, this study recommends future studies concerning the trade-off between CF decrease and the banks' profitability.

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“…Three authors [4][5][6][7] have, for instance, applied EVA performance measures. A financial performance measure can be decomposed by the pyramid (DuPont) method in several financial ratios and simulated as their function with correlations, obtaining a more robust prediction (see [8][9][10][11][12][13]). (b) A crucial problem in financial decision making is achieving good financial forecasting, and researchers have verified various methods (see [14][15][16][17][18][19]).…”

Section: Introductionmentioning

confidence: 99%

Distribution Prediction of Decomposed Relative EVA Measure with Levy-Driven Mean-Reversion Processes: The Case of an Automotive Sector of a Small Open Economy

et al. 2023

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The paper is focused on predicting the financial performance of a small open economy with an automotive industry with an above-standard share. The paper aims to predict the probability distribution of the decomposed relative economic value-added measure of the automotive production sector NACE 29 in the Czech economy. An advanced Monte Carlo simulation prediction model is applied using the exact pyramid decomposition function. The problem is modelled using advanced stochastic process instruments such as Levy-driven mean-reversion, skew t-regression, normal inverse Gaussian distribution, and t-copula interdependencies. The proposed method procedure was found to fit the investigated financial ratios sufficiently, and the estimation was valid. The decomposed approach allows the reflection of the ratios’ complex relationships and improves the prediction results. The decomposed results are compared with the direct prediction. Precision distribution tests confirmed the superiority of the decomposed approach for particular data. Moreover, the Czech automotive sector tends to decrease the mean value and median of financial performance in the future with negative asymmetry and high volatility hidden in financial ratios decomposition. Scholars can generally use forecasting methods to investigate economic system development, and practitioners can obtain quality and valuable information for decision making.

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The influence of social media usage on the DuPont method of analysis

Cited by 7 publications

References 26 publications

Has the COVID-19 pandemic affected the corporate financial performance? A case study of Slovak enterprises

Has the COVID-19 pandemic affected the corporate financial performance? A case study of Slovak enterprises

Cash Flows and Capital Adequacy Ratio of Indonesian Commercial Banks

Distribution Prediction of Decomposed Relative EVA Measure with Levy-Driven Mean-Reversion Processes: The Case of an Automotive Sector of a Small Open Economy

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