Sharpe et.al (2006) claimed Return on Assets is one of the financial ratios that are
intended to measure the performance of the company's main business or how profitable
intended to measure the performance of the company's main business or how profitable
and efficient companyin producing (or gain) as well as sell goods and services to
customers.
The equation can be used to calculate the ROA of a company are
as follows (Sharpe et.al, 2006):
ROA influence on stock return
Research conducted Prihantini (2009) found results that the ROAhas a positive influence
on stock return. With the increasing value of ROA shows a company's performance is
getting better, so thatthe benefits to be received by investors will also increase.
Of course this will attract the investors or prospective investors toinvest funds held in the company. This is in accordance with thestatement of Ang (1997) which states that
corporate profits are increasing signs that will provide operationaland financial
strength of companies is getting better, thereby providing a positive influence on equity.
Even Elleuch (2009) in his research found that ROA contribute to the superior level
of positivecorrelation in predicting stock return.
Nguyen (2004) finance fundamental analysis to look at its relationship with stock
returns in Japan in the 1993-2003 timeperiod. Research results showed
that each signal financialfundamentals have positive correlation with stock return.
Even theratios ROA and ROE is a fundamental signal which has the mostsignificant
relationship to stock return.
March 12, 2011 at 9:46 AM
Dear Online Friend,
We wish you the best luck and have a great weekend!
The StarGames and WMS Teams