CHAPTER-IV
ANALYSIS OF DATA
4.1 INTRODUCTION
The objective of this chapter is to analyse and go through all the sample
companies we have taken and to determine a relationship between the
variables and to find out their degree of their relationship and also to
determine how much dependable they are on each other. And to find out is
there any relationship with the firm size and firm performance.
4.2 Procedure for Analysis
As per our data collected of the Sample companies we have to determine how
the firm size affects the firm performance. For this purpose of determining we
have taken variables that will help us in determining the relationship between
the firm size and firm performance
We have to select a variable that is considered to be affecting the firm size and
a variable which will help us in measuring the firm performance. Then to
determine a relationship between them we have used Karl Pearson’s co-
efficient of correlation to determine the relationship and to what extent they
are related to each other.
But before going to the correlation part we have to obtain the basics part
which is summary statistics of all the variables which effect the firm size and
the firm performance. Like mean, median, mode, skewness, standard
deviation.
4.3 CORRELATION ANALYSIS
Table 1 explains the summary statistics of dependent and independent
variables. This critical descriptive statistics examination of the independent and
dependent variables disclose various issues. The ROA which is used as a
performance measure , which varies from negative 29% to positive 51% with
average ratio of 21%.
The average value of Firms sales is 88% and it varies to a minimum of 64% to a
maximum of 151% and Firms Assets have a average value of 45% and it varies
to minimum of 695 to 441% and this explores a great disparity between the
firm sales and firm assets
It also states the most volatile variable with a standard deviation of 4418.7 is
the assets of the firm followed by PB ratio with S.D of 16.435 while the least
deviated is ROA with 0.221 and Sales of the firm which is S.D 8.81.
Table 1 Summary Statistics of Independent and Dependent Variable
Variable Mean Median Minimum Maximum
ROA 0.21196 0.20474 -0.029779 0.51571
P/B Ratio 16.435 13.350 3.2500 61.810
Log of Sales 8.8102 8.5468 6.4363 15.136
Log of Asset 450.40 8.3747 6.9412 44196.
Variable Std. Dev. C.V. Skewness Ex. kurtosis
ROA 0.13290 0.62699 0.14145 -0.71961
P/B Ratio 11.084 0.67441 1.6404 2.9550
Log of Sales 1.2398 0.14072 1.5456 5.2153
Log of Asset 4418.7 9.8106 9.8494 95.010
Variable 5% Perc. 95% Perc. IQ range Missing obs.
ROA 0.0071979 0.42372 0.20793 0
P/B Ratio 5.3380 40.038 11.420 5
Log of Ratio 7.2746 10.759 1.1875 0
Log of Asset 7.3018 10.896 0.96287 0
Source: Results obtained from the data analysis using the statistical software GRETL
Table 2
The following correlation matrix given below of the two variables LOGASSET
and ROA to examine and for the purpose of obtaining the existing correlation
between the variables. The results of this correlation indicates that there is a
positive correlation between LOGASSET and ROA at 4%.
Table 2 : Correlation of Log asset and ROA
LOGASSET ROA
Pearson Correlation 1 .004
LOGASSET Sig. (2-tailed) .967
N 100 100
Pearson Correlation .004 1
ROA Sig. (2-tailed) .967
N 100 100
Source: Results obtained from the data analysis using the statistical software SPSS
Table 3
The following correlation matrix given below indicates the existing correlation
between LOG ASSET and the PB Ratio. The result of the correlation indicates
that there is negative correlation between the variables at 74%.
Table 3- Correlation between logasset and PBRatio
LOGASSET PBRatio
Pearson Correlation 1 -.074
LOGASSET Sig. (2-tailed) .475
N 100 95
Pearson Correlation -.074 1
PB Ratio Sig. (2-tailed) .475
N 95 95
Source: Results obtained from the data analysis using the statistical software SPSS
Table 4
The Following Correlation matrix given below indicates the existing correlation
between LOGSALES and ROA . The result of the correlation indicates that there
is a positive and significant correlation between LOGSALES and ROA at 345%.
Table 5 Correlation between logsales and ROA
LOGSALES ROA
Pearson Correlation 1 .345**
LOGSALES Sig. (2-tailed) .000
N 100 100
Pearson Correlation .345** 1
ROA Sig. (2-tailed) .000
N 100 100
**. Correlation is significant at the 0.01 level (2-tailed).
Source: Results obtained from the data analysis using the statistical software SPSS
Table 5
The following correlation matrix indicates the existing relationship between
the two variables LOGSALES and ROA. The result of this correlation indicates
that there is Positive correlationship between the two variable at 179%.
Correlations
LOGSALES PBRatio
Pearson Correlation 1 .179
LOGSALES Sig. (2-tailed) .082
N 100 95
Pearson Correlation .179 1
PBRatio Sig. (2-tailed) .082
N 95 95
Source: Results obtained from the data analysis using the statistical software SPSS
4.4 GRAPHS
0.6
0.5
0.4
0.3
v6
0.2
0.1
-0.1
0 5000 10000 15000 20000 25000 30000 35000 40000 45000
v9
Graph No.1 Relationship between LOGASSET and ROA
From the above graph we can derive the conclusion that there lies a
insignificant and positive relationship between the variables LOGOFASSETS and
ROA. The correlation result from the table 2 indicates that there is a
correlation of 4% between both the variables.
v7 versus v8 (with least squares fit)
70
Y = 2.18 + 1.61X
60
50
40
v7
30
20
10
0
7 8 9 10 11 12 13 14 15
v8
GRAPH 2 – Indicates the relationship between LOGSALES and P/B Ratio
The above graph indicates the relationship between LOGSALES and P/B ratio
which shows us that there is a positive and insignificant relationship between
both the variables. The correlation between these two variables is at 179%.
70
60
50
40
v7
30
20
10
0
0 5000 10000 15000 20000 25000 30000 35000 40000 45000
v9
GRAPH 3 – Establishes the relationship between log of asset and P/b Ratio
The above graph indicates the relationship between log of asset and it
discloses that there is insignificant and negative relationship between logo of
asset and P/b Ratio at 74%.
v6 versus v8 (with least squares fit)
0.6
Y = -0.114 + 0.0370X
0.5
0.4
0.3
v6
0.2
0.1
-0.1
7 8 9 10 11 12 13 14 15
v8
Graph 4 Indicates the relationship between Log of sales and ROA
The above graph indicates the relationship between Log of Sales and ROA . The
graph shows that there is a significant and positive relationship between both
the variables. Both the variables are related to each other at 342%.
4.5 Conclusion
We used gretl software for the output of graphs with the tool scatter diagram
to derive the relationship between dependent and independent variables. The
scatter diagram how the variables indicate and make relationship with each
other.
