Usefulness of the modified partial differences method in complex ratio analysis
Journal Title: Zeszyty Teoretyczne Rachunkowości - Year 2014, Vol 2014, Issue 76
Abstract
The aim of the paper is presentation of the theory behind the partial differences method and evaluation of its usefulness in contemporary, complex ratio analysis. The Taylor-series-based analysis facilitates calcu-lation in cases of complexity of the analyzed function and considerable number of explanatory variables; furthermore, the existence of the remainder term is the premise to ignore next terms of the Taylors series, which represent common differences. Such a step eliminates the problem of their sometimes embarrass-ing interpretation. An example of the efficient analysis of RIOA, i.e. the modified residual income to total assets ratio is presented. The system of the RIOA consists of nine factors.
Authors and Affiliations
Piotr Wójtowicz
Keywords
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