This paper reviews and demonstrates the application of ROI and ROE decomposition. The insights gained from analyzing financial components of a business serve to identify weaknesses, opportunities for improvement, and irregularities that may signal serious internal problems.
This paper addresses the Enron financial statement fraud case and specifically with the advantage of hindsight, answers the question: “As a fraud investigator, how would you go about finding the existence of these liabilities and partnerships?” (Albrecht et al., 2012, p. 481) The paper concludes with analysis of the final Enron Annual Report of 2000 highlighting areas in the report most indicative of financial irregularities.
This paper examines the dimensions and “forces” found in common-size financial statements in both the vertical and horizontal forms. The analysis looks at the financial metrics, trends, and insights that can be gained from comparing statements in the vertical and horizontal directions. The paper concludes with a discussion of Melse (2008) and addresses the research question and conclusions made in the article titled, “Accounting in three dimensions: A case for momentum revisited.”
This paper defines, describes, and illustrates financial leverage related to ROE and ROI using numerical illustrations. A similar comparison of the effects and relationship of financial leverage is made with EBIT and Net Income using numerical illustrations. Lastly a review of the article Lord (1998) is made evaluating the key elements of how time-series estimates impact the degree of leverage measures.
An analysis of approximately 30 technical indicators using a back testing market performance analysis shows in studies that five indicators in particular out-perform the rest of the pack. Analyzing the crossover points of each of the top five indicators identifies fairly reliable signals for stock price uptrend and downtrend changes.