Markets and their Analysis.

Essay by anujnsehgalUniversity, Master'sA+, November 2003

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Markets and their analysis


Topic Page #


Literature Review3


Statistical Analysis - 6

Sample Selection and Data Description6

Empirical Results7

Analysis of Results10





Conventional wisdom says that net income or the cash available after interest and taxes is the most common means to determine the performance of the company. However, although it is certain that Net Income in general could be used as a measure of success, it is dependent on several other factors or variables. The purpose of this analysis is primarily to understand the relationship between Net Income and other variables such as ROE, ROA, Cash Flow and Gross Profit, and secondarily to become familiar with the tools available for financial analysis. We eventually hope to determine which independent variables most significantly drive the Net Income of businesses in the United States.

Studies done by Wakita, Fitzsimmons and Liao suggest that "independent demographic variables such as ethnicity maybe used as a means to predict levels of net income."

Similarly in our analysis we are attempting to determine the factors that help predict our dependent variable which is Net Income

In this paper we will be discussing the literature we found that has bearing to our study. Also we will be explaining our hypothesis, the manner in which we selected our data for the study, our results and the analysis of the results and finally our derived conclusion. Another aspect of our analysis is to do exception reporting to determine what causes certain companies performance variables to be outliers. Thereafter, we will resolve what causes these variables to perform in this manner.

Literature Review

The literature review was based on "Shareholder Value" by Peter Keen. This topic was researched using shareholder value as the dependent variable, and its importance to long-term investors.