Return on Assets and Financial Soundness Analysis: Case Study of Grain Industry Companies in Uzbekistan
Abstract
Ensuring financial stability and soundness of companies operating in a particular industry depends on the several internal and external factors, which can be classified as firm and macro levels. According to classical business finance theories, return on assets (ROA) are thought to be the most effective instrument of measuring monitoring the financial status of companies. In most literature, revenues from sales, total operating cost and asset structure of a company plays an important role in shaping an acceptable ROA indicator. In this paper, impact level of these factors on ROA was examined in case of three grain processing companies in Uzbekistan. Conducted OLS test showed that total operating cost and asset structure had negative influence on ROA, while revenues from sale supported the financial stability of the companies.