EXAMINING THE INTERDEPENDENCES BETWEEN CAPITAL VALUE AND SELECTED RATIOS IN MANUFACTURING FIRMS

The paper is attempting to examine the statistical interdependencies between the changes in the following ratios: liquidity ratio, leverage ratio, activity ratio, and profitability ratio, number of employee ratio and cash flow ratio on one hand and capital ratio on the other in the Croatian manufacturing sector. The aim of the paper is to test the two hypotheses: 1) The greater influence of the business evaluation methods given by business success ratios based on accounting values and market values (excluding values from capital markets) from the evaluation methods based on capital markets value is a result of underdevelopment of the capital markets in Croatia. 2) The greater influence of accounting capital in valuation practice increases the importance of the tested ratios (the changes in the liquidity ratio, leverage ratio, activity ratio, profitability ratio, number of employee ratio and cash flow ratio) which help explain the positive or negative changes of accounting capital in the manufacturing Public stock companies (PSC) from 2001 - 2003 in Croatia.