Abstract:
Among the many return indicators, Return on Assets (ROA) is mostly used by
firms’ managers to measure the performance of a company. This paper studies the
factors that influence the ROA. There are different types of financial factors[current
asset (CR), quick ratio (QR), cash ratio (CSR), operating profit margin (OPM), net profit
margin (NPM), total asset turnover (TAT), current asset turnover (CAT), fixed asset
turnover (FAT), account receivable turnover (ART), inventory turnover (IT), inventory
holding period (IHP), debt to equity (DTE), debt to total asset (DTTA), debt ratio (DT),
return on equity(ROE), earning per share (EPS)] used to measure return on assets
(ROA). A multiple linear regression model is used to measure the influence of these
factors on ROA where ROA is used as a dependent variable and rest of the factors are
used as independent variables. This study has found that most of the factors have positive
relationship with ROA; however some of the factors have negative relationship with
ROA.
