This paper aims to extend an earlier analysis of the profitability of an individual firm operating in the professional services industry from the perspective of the triple‐entry framework of the momentum accounting theory of Yuji Ijiri.
The paper presents a “common‐size‐format” model of balance‐sheet momentum, an approach typical of financial statements' mathematical analysis.
Common‐size‐format momentum ratios offer an alternative measurement of (the change of) business performance. They model stabilizing phenomena that might develop very differently from ratios like return on total assets or return on equity and thus provide important informational signals to the analyst of financial statements. The common‐size‐format ratio of net wealth momentum herein discussed is proposed as a supplemental measurement for business performance analysis.
The paper discusses a new method for performance measurement and risk analysis.
