The impact of the brand value on profitability ratios – example of selected companies listed on the Warsaw Stock Exchange
The impact of the brand value on profitability ratios – example of selected companies listed on the Warsaw Stock Exchange

Summary/Abstract: In the case of performace measures based on accounting data, the common drawback is that they do not account adequately for periodical effects and related investments. This applies mainly to companies that base their business on intangibles. The vast majority of intangible assets is not disclosed in the company’s balance sheet, which underestimates the real amount of investment during the period. This problem has been recognized by theorists and practitioners many years ago. This article refers to the issue of modification of the indicators measuring the company profitability, by inclusion in their calculation the financial information regarding company’s brand value. The article presents an application of proposed methodology for calculation of profitability ratios for selected companies listed on the Warsaw Stock Exchange. It also examines a strength of relations between profitability ratios estimated and shareholder value creation measure – price/book value (P/BV) ratio.

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