Evaluation of the Return on Assets in Various Industries of Tehran Stock Exchange

Abstract

Today, one of the most important tasks of financial management is to provide appropriate approaches for better use of financial resources in the community and one of the most important issues is to provide appropriate conditions for a better selection of investment projects, and finally the return on assets. The use of modern knowledge, the return on assets and prediction of the future makes better use of public wealth that ultimately results in valuing the investors' efforts. Investors aim to maximize the return on assets, however, they also intend to reduce risk. Therefore, this study tried to evaluate the ratio of ROA (return on assets) in various industries of the companies listed on the Tehran Stock Exchange (according to ISI). Therefore, this study collected data of 2004-2013 and Haussmann test was used to assess the validity of the variables before analyzing the data. Then, panel data regression was used to analyze the data. The results of the study show that a significant relationship exist between return on assets and profit margin ratio and asset turnover, and return on assets was also affected by the profit margin rather than assets turnover.