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| Tekijä: | Ashton, D. Dunmore, P. Tippett, M. |
| Otsikko: | Double entry bookkeeping and the distributional properties of a firm's financial ratios |
| Lehti: | Journal of Business Finance and Accounting
2004 : JUN/JUL, VOL. 31:5-6, p. 583-606 |
| Asiasana: | Accounting Bookkeeping Finance Business ratios Discriminant analysis |
| Kieli: | eng |
| Tiivistelmä: | This paper aims to assess whether the innate properties of the double entry bookkeeping (hereafter as: b-k.) system (here as: b-k-s.) are such that financial ratios, calculated from the balance sheet summary measures implied by it, will be generated by distributional forms with non-convergent moments. The analysis begins with a brief summary of some important analytical properties of the debt and equity components of the double entry b-k-s. These are used to determine the time series and distributional properties of the debt to equity ratio itself. This paper's analysis shows that even when the evolution of balance sheet summary measures like debt and equity can be described by 'well behaved' distributional processes, there is a distinct possibility that ratios derived from them will evolve in terms of distributional forms with non-convergent moments. It is argued that this has serious implications for parameter estimation as well as the integrity of the regression and/or discriminant procedures. |
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