Financial Performance of Industry: A Case Study from Pakistan

Abstract

The main objective of this examination is to investigate the impact of ratio analysis to study the financial health i.e., Sales Growth (SGR) of companies for the period 2018-2022. The study sample consists of 05 firms from pharmaceutical sector. The study is quantitative in nature and secondary data is used in this thesis. An aggregate of 14 financial ratios is used, which are incorporated into the examination to explore firm sales growth. Data is gathered from firms’ annual reports. Annual reports of the firms are extracted from companies’ websites, PSX website and SBP. Regression, correlation, and descriptive statistics are used to analyze the data. Principle Component Analysis (PCA) method is used in the study. Five components are selected after scree-test. The findings of ordinary least square (OLS) regression model suggest that return on assets enhances SGR by 0.15%. Thus, return on assets and SGR are positively correlated. In terms of ROE and SGR we expect positive and significant coefficients for ROE variable. Hence, there is a noteworthy and strong coefficient on ROE. The outcome shows that ROE increases SGR by 0.17%. GM has insignificant effect on SGR. CR is stated to have a desirable effect on SGR. The positive signs (p < 0.01) on CR measure indicate that CR improved the SGR by 0.07%. The hypotheses are supported by the evidence that ATR is linked with increase in SGR. The outcomes are statistically sufficiently great at 1% level.  Particularly, one unit increase in ATR is linked with 0.05% increase in SGR.