CHAPTER

04

RESULTS

AND DISCUSSION

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.