THE EFFECTS OF SELECTED FINANCIAL RATIOS ON PROFITABILITY: AN EMPIRICAL ANALYSIS OF REAL ESTATE FIRMS IN VIETNAM

Le Ngoc Thuy Trang, Do Thi Thanh Nhan, Dung Nguyen Thi Phuong and Wing-Keung Wong
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Le Ngoc Thuy Trang: Undergraduate Studies Department, Ton Duc Thang University, Ho Chi Minh City Vietnam
Do Thi Thanh Nhan: Faculty of Finance and Banking, Ton Duc Thang University, Ho Chi Minh City, Vietnam
Dung Nguyen Thi Phuong: Foreign Trade University, Ho Chi Minh Campus, Vietnam

Annals of Financial Economics (AFE), 2022, vol. 17, issue 01, 1-29

Abstract: The paper examines the determinants of profitability of real estate companies by using panel data of Vietnamese listed companies on the Hanoi stock exchange (HNX) and Ho Chi Minh City stock exchange (HOSE) from 2007 to 2020. Profitability ratios are measured by return on assets (ROA) and return on equity (ROE). The results indicate that the cost on revenue ratio, debt-to-equity ratio and the crisis and COVID-19 pandemic are negatively correlated with firm profitability. Meanwhile, the sales to current assets ratio, money supply growth rate and economic growth rate (GDPG) provide a positive correlation with profitability. We find that firm size and equity to total assets have positive effects on ROA, while there is a negative relationship between equity to total assets and ROE, and not enough evidence to conclude how firm size affects ROE. The study thereby provides suggestions and recommendations for the administrators of the government, real estate companies and investors in Vietnam.

Keywords: Profitability; real estate; financial ratios; return on assets; return on equity (search for similar items in EconPapers)
Date: 2022
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DOI: 10.1142/S2010495222500063

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