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CHAPTER
04

RESULTS
AND DISCUSSION

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4.1. Table 1 Descriptive Analysis

Descriptive Results

 

 

 

 

 

 

 

ROA

ROE

DTER

DTAR

ICR

 

 

 

 

 

 

 

 

 

 

 

 

 Mean

 5.178462

 14.40056

 10.72041

 0.752760

 29.52149

 Median

 3.375000

 8.303500

 3.978000

 0.665000

 2.945000

 Maximum

 44.61000

 162.2460

 174.0320

 2.200000

 780.1000

 Minimum

-18.36000

-64.45700

-2.099000

 0.115000

-93.49300

 Std. Dev.

 12.68271

 47.50222

 29.01470

 0.501772

 124.1366

 Skewness

 0.256254

 1.211604

 4.374516

 1.015443

 4.613209

 Kurtosis

 3.118668

 4.869754

 21.35794

 3.414018

 25.37867

 

 

 

 

 

 

 Jarque-Bera

 0.922486

 31.22637

 1378.531

 14.31970

 1953.105

 Probability

 0.630500

 0.000000

 0.000000

 0.000777

 0.000000

 

 

 

 

 

 

 Sum

 414.2770

 1152.045

 857.6330

 60.22080

 2361.719

 Sum Sq. Dev.

 12707.24

 178260.4

 66506.39

 19.89024

 1217382.

 

 

 

 

 

 

 Observations

 80

 80

 80

 80

 80

The
above slab show descriptive outcome of 80 observations and five variables are
tested. Return on asset (ROA) of mean Is 5.178462, median 3.375000, extreme
value is 44.61000 and lowest value is -18.36000 and the standard deviation is
12.68275. Another one is return on equity (ROE) which mean is 14.40056, median
is 8.303500, extreme value is 162.2460, and lowest
value is 64.45700 while standard deviation is 47.50222. third variable is dent
to equity ratio (DTER) which mean is 10.72041, median is  3.978000 and smallest
and supreme values are  174.0320, -2.099000, and the standard deviation is
 29.01470. Fourth variable debt to asset ratio (DTAR) and its mean is
0.752760, median is 0.665000 while supreme and least value is 2.200000 and
0.115000, and the standard deviation is 0.501772. The fifth and last variable
of the research is interest coverage ratio (ICR) its mean is 29.52149, median
is   2.945000, extreme value is
780.1000 and bottom value is -93.49300 and the standard deviation is 124.1366.

 

 

 

 

 

 

 

4.2. Table II Correlation Analysis

Correlation Results

 

 

ROA

ROE

DTER

DTAR

ICR

 

 

 

 

 

 

 

 

 

 

 

 

ROA

 1.000000

 

 

 

 

ROE

 0.837554

 1.000000

 

 

 

DTER

 0.063514

-0.063028

 1.000000

 

 

DTAR

-0.467776

-0.413383

-0.234226

 1.000000

 

ICR

 0.302816

 0.143744

-0.004755

-0.287733

 1.000000

 

 

 

 

 

 

The
above table of correlation show the link between variables, ROA, ROE, DTER,
DTAR and ICR.in this test eighty number of observations are include. In the
first row return on asset show the relationship between itself which value is
100% after that in second Colum it show the relationship between return on
asset and return on equity which have positive relationship value is
83.76%.  In third Colum there is also the
positive relationship between return on asset and debt to equity ratio and the
value is 6.35%. Fifth row show the relationship of debt to asset ratio and
return on asset, it have negative relation the value is 46.78% while interest
coverage ratio have positive relation with return on asset with the value
30.28%.

In
the second row return on equity show the positive relation with return on asset
which value is 83.76%. Position relationship of 100% return on equity itself.
Debt to equity ratio have negative relationship, value is -6.3%. The value of
debt to asset ratio is -41.33% and negative relationship with return on equity
while interest coverage ratio has positive relation with return on equity with
the value 14.37%. 

Third
row show the connecton between debt to equity ratio with other variables. There
is positive relationship between return on asset and debt to equity ratio the
value is 6.35%. -6.30% value and negative relationship between debt to equity
ratio and return on equity. Debt to equity ratio has 100% positive relationship
with itself. Debt to asset ratio and interest coverage ratio has negative
relation and the values are -23.422%, -0.47%. 

The
fourth racket show the  connection of
debt to asset ratio with return on asset, return on equity and debt to equity
is descripivte and the values are -46.78%, -41.44% and -23.42%.  debt to asset ratio have pressive
relationship with itself and the value is 100% while the relationship of
interest coverage ratio with debt to equity ratio is demaging and that value is
-28.77%.

The
fifth racket shows the relationship of interest coverage ration with return on
asset which is insignificant and the value is 30.28%. In second Colum return on
equity is also insignificant and the value is 14.37%. In third Colum show adverse
relationship with debt to equity ratio which value is -0.47%. Debt to asset
ratio has also bad relationship and the value 28.77%. Interest coverage ratio
has positive rapport with itself and value is 100%.

 

4.3. Table III Regression Analysis

Key results of return on equity
(ROE)

 
Correlated Random Effects – Hausman
Test

 

Pool: Untitled

 

 

 

Test cross-section random effects

 

 

 

 

 

 

 

 

 

 

 

Test Summary

Chi-Sq.
Statistic

Chi-Sq.
d.f.

Prob. 

 

 

 

 

 

 

 

 

 

 

Cross-section random

3.161888

3

0.3673

 

 

 

 

 

 

 

 

 

 

 

Panel Regression has applied on mutural upshort were the test of
fixed and Hausman test is applied. After applying hausman test I receive
insignificant result there for I apply Random model. For significant the
hausman test result should be less the 5% but I got 36% which is insignificant.

 

 

 

Dependent Variable: ROE_?

 

 

 

 

Method: Pooled EGLS (Cross-section random effects)

 

Date: 01/16/18   Time:
09:11

 

Sample: 2007 2016

 

 

Included observations: 10

 

 

 

Cross-sections included: 8

 

 

 

Total pool (balanced) observations: 80

 

 

Swamy and Arora estimator of component variances

 

 

 

 

 

 

 

 

 

 

 

 

 

Variable

Coefficient

Std.
Error

t-Statistic

Prob.  

 

 

 

 

 

 

 

 

 

 

 

 

 

C

0.604125

2.467188

0.244864

0.8072

 

DTER_?

14.84441

0.475624

31.21040

0.0000

 

DTAR_?

-10.38264

1.905813

-5.447880

0.0000

 

ICR_?

0.003891

0.007024

0.553923

0.5813

 

Random Effects (Cross)

 

 

 

 

 

BWCC–C

1.706089

 

 

 

 

CCC–C

-0.424100

 

 

 

 

DADCC–C

-1.677999

 

 

 

 

DANCC–C

-1.776293

 

 

 

 

DJKCC–C

7.388274

 

 

 

 

FCC–C

-8.641422

 

 

 

 

KCC–C

0.920026

 

 

 

 

LCC–C

2.505423

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Effects Specification

 

 

 

 

 

 

S.D.  

Rho  

 

 

 

 

 

 

 

 

 

 

 

 

 

Cross-section random

4.956057

0.3671

 

Idiosyncratic random

6.507174

0.6329

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted Statistics

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

R-squared

0.928946

    Mean
dependent var

4.110849

 

Adjusted R-squared

0.926141

    S.D.
dependent var

23.96921

 

S.E. of regression

6.514100

    Sum
squared resid

3224.946

 

F-statistic

331.2035

    Durbin-Watson
stat

2.020124

 

Prob(F-statistic)

0.000000

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Unweighted Statistics

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

R-squared

0.925870

    Mean
dependent var

10.72041

 

Sum squared resid

4930.139

    Durbin-Watson
stat

1.321421

 

 

 

 

 

 

 

 

 

 

 

 

 

ROE= ?+ ?1DTER+ ?2DTAR+ ?3ICR+e

ROE= 0.604125+14.84441-10.38264+0.003891

The
regression analysis identifying the effect of independent variables (DTER, DTAR
and  ICR) on dependent variables (ROE).
The above table explains the model of regression which explain the effect of
(DTER, DTAR, ICR) on (ROE) by spendng least honest method. C is that the rentleness
which explain the (ROE) covers is 0.604125 and there for the (DTER)
intercept  14.84441
that show that (DTER) has positive effect on (ROE) while (DTAR) intercept is
-10.38264  show it has a damaging result
on (ROE) and (ICR) stop is  0.003891 and
has progressive effect on (ROE). Within the table price of worth of R-squared display
strength amoung dependent and variable quantity that the part variation in mutable
is described by the variable quantity and there for the value is 0.928946 advise
(DTER, DTAR, ICR) justifies 92.89% (ROE) variation and the difference is 7.11%
difference on (ROE) explain the reverst issue that did not reserved theu the learning.
The worth of F-statistic shows the aptness of the perfect that is 331.2035 helpful
and there for the worth of chance is 0.000000 that a smaller amount then
significant level 0.05. That the result is important.

 

Key results of return
on asset (ROA)

Correlated Random Effects – Hausman
Test

 

Pool: Untitled

 

 

 

Test cross-section random effects

 

 

 

 

 

 

 

 

 

 

 

Test Summary

Chi-Sq.
Statistic

Chi-Sq.
d.f.

Prob. 

 

 

 

 

 

 

 

 

 

 

Cross-section random

34.243212

3

0.0000

 

 

 

 

 

 

 Panel Regression has realist
on common effect were the test of fixed and Hausman test is applied. After
applying hausman test I receive significant result there for I apply fixed
model. For significant the hausman test result should be less the 5% but I got
0% which is significant.

 

Dependent Variable: ROA_?

 

 

Method: Pooled Least Squares

 

 

Date: 01/16/18   Time:
09:22

 

 

Sample: 2007 2016

 

 

Included observations: 10

 

 

Cross-sections included: 8

 

 

Total pool (balanced) observations: 80

 

 

 

 

 

 

 

 

 

 

 

Variable

Coefficient

Std.
Error

t-Statistic

Prob.  

 

 

 

 

 

 

 

 

 

 

C

11.57535

2.286389

5.062723

0.0000

DTER_?

0.391924

0.618009

0.634172

0.5281

DTAR_?

-9.375569

2.511474

-3.733094

0.0004

ICR_?

0.006445

0.009011

0.715167

0.4769

Fixed Effects (Cross)

 

 

 

 

BWCC–C

1.950889

 

 

 

CCC–C

1.544789

 

 

 

DADCC–C

-6.466598

 

 

 

DANCC–C

-13.75190

 

 

 

DJKCC–C

1.341808

 

 

 

FCC–C

8.811506

 

 

 

KCC–C

3.315752

 

 

 

LCC–C

3.253754

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Effects Specification

 

 

 

 

 

 

 

 

 

 

 

 

Cross-section fixed (dummy variables)

 

 

 

 

 

 

 

 

 

 

 

R-squared

0.641535

    Mean
dependent var

5.178463

Adjusted R-squared

0.589584

    S.D.
dependent var

12.68271

S.E. of regression

8.125017

    Akaike
info criterion

7.154853

Sum squared resid

4555.097

    Schwarz
criterion

7.482381

Log likelihood

-275.1941

    Hannan-Quinn
criter.

7.286168

F-statistic

12.34876

    Durbin-Watson
stat

0.819678

Prob(F-statistic)

0.000000

 

 

 

ROA= ?+ ?1DTER+ ?2DTAR+ ?3ICR+e

ROA= 11.57535+0.391924-9.375569+0.006445

The
regression analysis identifying the effect of independent variables (DTER, DTAR
and ICR) on dependent variables (ROA). The above table explains the model of
regression which explain the effect of (DTER, DTAR, ICR) on (ROA) by using tiniest
square process. C is 11.57535 that the endless
which explain the (ROA) contains is 0.391924 and
there for the (DTER) intercept is that show that
(DTER) has positive effect on (ROA) while (DTAR) intercept is -9.375569 that
show it has a negative effect on (ROA) and (ICR) intercept 0.006445 and has
positive effect on (ROA). Within the table price of worth of R-squared shows
strength amid the dependent and variable quantity and the proportion variation
explained by the variable size and there for the value 0.641535 suggest (DTER,
DTAR, ICR) justifies 64.15% (ROA) variation and the difference is 35.85%
variation of (ROA) clarify by the opposite reasons that did not takn during the
study. Worth F-statistic display the aptness of a ideal that is 331.2035
positive and there for the worth of probability 0.000000 that is a smaller
amount significant near 0.05. That the result is important. 

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