Research Paper (postgraduate) from the year 2017 in the subject Business
economics - Banking, Stock Exchanges, Insurance, Accounting, Sikkim
Manipal University Bangalore (Sikkim University, Gangtok, India),
language: English, abstract: In the study of Financial Management and
Financial Accounting, the Financial Ratios have always played important
roles in determining the quality of operational and financial
performances of a business organization. This research paper's
objectives are primarily two - fold: first, to formulate composite
indices under five major categories, namely; Liquidity, Leverage,
Operating Efficiency, Profitability, and Market Measures (Fraser and
Ormiston, 2012) and review whether the composite indices under each
category could be regressed by their own financial ratios; and second,
to formulate a Grand Financial Index (GFI) comprising of all the five
composite indices which would be able to represent a holistic view of a
business organization by taking into consideration all the necessary key
points covering all the aspects of financial accounting. In this
context, a time - series empirical study of 30 years (1987 - 2016) has
been conducted on Wal-Mart, the leading company (in terms of revenue) on
the FORTUNE 500 (R) list, in order to supplement empirical evidence to
the findings. In addition to that, an attempt has been made to formulate
a regressionary relationship between the Grand Financial Index (GFI),
the Composite Short - term Liquidity Index (CSLI), the Composite
Financial Leverage Index (CFLI), the Composite Activity Ratio Index
(CARI), the Composite Profitability Ratio Index (CPRI), and the
Composite Market Ratio Index (CMRI).
