The investigation of relationship between labor value added and accrual and cash performance measures of companies in drug industry
Subject Areas : Management Accounting
Zohreh
Hajiha
1
(ندارد)
Keywords: labor value added, bankruptcy model, value added ratios, discriminant method,
Abstract :
In recent years, value added and labor value added variables in presentation andmeasurement of companies performance have been vastly used. From another aspect,predicting financial situation of companies has become a concern of professionalistsand academicians. To connect between these two phenomena can cover some gaps inboth fields. Therefore, in this research labor value added variables were calculated inthree groups of Economic Structure Ratios, Productivity Ratios and ManagerialEfficiency Ratios. Each of these ratios also were calculated for three groups of directlabor, indirect labor and non manufacturing labor. Research period was 7 years from2001 to 2007 and companies active in drug industry accepted in Tehran StockExchange were analyzed. There are a variety of ratios, so an average of ratios for sixyears was calculated for each ratio. Bankruptcy prediction model that was used todifferentiate between bankrupt and non bankrupt companies for the research, is SprinGate (1978) model. Based on the model that was applied in 2007( last year of theresearch), sample companies were categorized into two groups of bankrupt and nonbankrupt and by value added ratios of these companies.Discriminant function is including ten ratios from two groups of EconomicStructure Ratios, Productivity Ratios and Managerial Efficiency Ratios. From tenratios that are discriminant ratios, six are related to indirect and non manufacturinglabor value added and only 4 variables are related to manufacturing direct labor valueadded. In the mean time, they are not the strongest discriminant ratios. This result isinteresting since it presents the importance indirect labor and non manufacturinglabor to create value added.
