Measuring the Impact of Some Determinants of Return on Investment in Industrial Companies in Aqaba City

Farouq Ahmad Alazzam

doi:10.5296/bms.v5i2.6067

Abstract

The main objective of this study is to measure the effect of some variables to the return on investment in industrial companies in Aqaba city. It has been found that were three determinants of a positive impact on return on investment they are an indebtedness, automation and growth rate, while the two variables found to have a negative impact, the liquidity ratio and the rate of turnover in accounts receivable. The study recommended that companies resort debt in financing on their operations especially in asset purchase and rely on fixed assets at their production process and reduce the liquidity ratio as much as possible and to examine the reasons for the negative relationship between table circulation of accounts receivable and the rate of return on investment and to overcome them or reduce them.

Highlights

The focus of the economic units to maximize the profitability, and to achieve this goal there are techniques, methods and basis these units rely on, during its economic operation and maximize the profits depends on the success of the facility at effect on the elements of the profitability of expenditures and revenues, what is required to control expenditures and increase revenue and to achieve it in many and varied ways resort to facility.This has increased the attention of researchers to discover the determinants of positive and negative profit to promote the first one and run down the other
The study found the following: 1-Regression model of dependent variable and the goal of the proceeds to invest in industrial companies in the city of Aqaba show that the independent variables explanatory which is a debt ratio, liquidity ratio, the percentage of automation, the growth rate and the rate of turnover of accounts receivable, all of the determinants of the dependent variable, and the explanatory variables determine the rate of 96% changes of return on investment
2-There are three independent variables have a positive effect on the return on investment in industrial companies in the city of Aqaba .first of all is the ratio of debt and by (0.291) which means that the debt financing was meaningful and supportive of profitability, second is the percentage of automation and by (0.626) which means that the purchase of fixed assets and transformation from manual to the automatic raising of profitability, and the growth rate and by (0.524) which means that any increase in the value of sales improves profitability

Summary

Introduction

The focus of the economic units to maximize the profitability, and to achieve this goal there are techniques, methods and basis these units rely on, during its economic operation and maximize the profits depends on the success of the facility at effect on the elements of the profitability of expenditures and revenues, what is required to control expenditures and increase revenue and to achieve it in many and varied ways resort to facility This has increased the attention of researchers to discover the determinants of positive and negative profit to promote the first one and run down the other. It conducted several studies to various economic units in Jordan in this regard, but by researcher’s knowledge, it had not been made any study concerning at industrial companies in Aqaba special economic zone (ASEZ)

Objectives

Methods

Results