THE CORRELATION BETWEEN THE AUTONOMY RATIO AND THE RETURN ON EQUITY

Previous studies conducted over companies from the Timis County indicate a negative correlation between the autonomy ratio and the bankruptcy risk. At the same time, high values of the autonomy ratio could have a negative effect on the return on equity. The current study aims to evaluate the relationship between the autonomy ratio and the return on equity. The target population included all the companies from the Timis County that have submitted financial statements to the fiscal authorities for the period 2007 – 2010, reporting positive equity and annual sales of over 10,000 lei. The research has thus employed 33,064 yearly financial statements. Considering the relationship between the autonomy ratio and the bankruptcy risk as well as the relationship between the autonomy ratio and the return on equity, it is concluded that the optimum value of the autonomy ratio is placed within the interval [50%; 100%].