The Role of the System of Economic and Financial Indicators in Diagnosing Entity Performance

Abstract

The paper examines the role of the system of economic and financial indicators in diagnosing entity performance, using S.R.L. X-Service as a case study. The research is motivated by the need to combine liquidity, leverage, profitability and operating-efficiency indicators in a coherent analytical framework that supports managerial decisions. The study uses comparative analysis, dynamic analysis and indicator-based diagnosis for the period 2022–2024, based on publicly available company data. The results show that the entity strengthened its short-term liquidity and reduced its debt burden, while profitability deteriorated significantly in 2024, despite the recovery of sales revenues. The evidence suggests that an isolated reading of a single indicator can be misleading; only a system of interrelated indicators allows a balanced diagnosis of financial position and performance. The article highlights that the company displays a favorable solvency profile and improved working-capital management in 2024, but also a visible compression of profit margins and return on equity. Therefore, the system of indicators plays both a diagnostic role, by identifying vulnerabilities and strengths, and a predictive role, by supporting corrective measures related to cost control, commercial policy and working-capital optimization. CZU: 005.915:[005.52:005.216.1](478); JEL: G32, M41