Indicators and ratios that determine the return on equity

Lopes, José Carlos; Nunes, Alcina; Garnacho, Ariana Daniela do Canto

http://hdl.handle.net/10198/16932

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Authors

Lopes, José Carlos

Nunes, Alcina

Garnacho, Ariana Daniela do Canto

Abstract(s)

Concerning the business management, achieving profitability is considered one of the most important business objectives to be considered, allowing the survival of businesses and fostering their growth. Thus, it is fundamental to analyze the company performance regarding the return on equity. In this study, using a sample based on companies listed on the stock markets (components of the Euronext 100 index) and using the Ordinary Least Squares Method, we identified the most relevant financial indicators and ratios that have greater explanatory power on the return on equity. Our findings show that the return on assets, the return on sales and the net income to common stocks are the variables that seem to have the greater explanatory power in determining the return on equity.

Keywords

Return on equity Index euronext 100 Financial ratios Financial Indicators

URI

http://hdl.handle.net/10198/16932

Citation

Lopes, José; Nunes, Alcina; Garnacho, Ariana (2014). Indicators and ratios that determine the return on equity. In XXIV Jornadas Luso-Espanholas de Gestão Científica. Leiria: Instituto Politécnico de Leiria. ISBN 978-972-8793-66-1