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Current ratio: Current ratio is defined as the total liquidity of the firm. The ideal current ratio is 2 :1 which means that ideally the current assets should be more , should be twice than that of current liabilities as the ratio states that current ratio = current assets /current liabilities higher the liquidity of the firm lower is the risk ,lower is the profit.
Regression Statistics Multiple R R Square Adjusted R Square Standard Error Observations 0.473085236 0.223809641 0.029762051 1.633745573 6
MS 3.078501605 2.669124599
F 1.153375008
t Stat 0.558125347
P-value 0.60652112
2.67436145
1.073952982
0.343312664
-4.553079
10.2973562
-4.553079306
10.297356
Interpretations of the regressed output : R square is roughly 22.2% which shows that the regressed model is not relevant because that means that 22.2% of the variation in ROCE IS explained by current ratio Standard error basically shows that how much is the data dispersed which is around 1.63.
The x variable is in positive which clearly states that there is a direct relationship between current ratio and ROCE because an increase in the value of the current ratio will lead to a increase in the value of ROCE as the equation here is Y=1.75 + 2.87X X here stand for current ratio The p value is around 0.34 which shows that the value of the slope is significant. Correlation is coming out to be 0.47 which shows the direct relationship between the ROCE and the current ratio and further confirms the positive slope.
Raw material inventory holding period : Raw material inventory holding period is the time taken to convert the raw materials into work in progress; it is not advisable for the firm to show a higher raw material inventory holding period as it increases the time for the complete manufacture Our analysis shows :
Regression Statistics Multiple R R Square Adjusted R Square Standard Error Observations 0.8333264 0.6944329 0.6180412 1.0250701 6
MS 9.55192508 1.05076873
F 9.0904162
t Stat 7.045546068
P-value 0.0021395
RIHP
-0.030227
0.010025319
-3.01503171
0.039355
-0.0580614
-0.0580614
-0.1470459
1.7763793 6
df Regression 1
SS 1.132907
MS 1.132907
F 0.3590235
Residual Total
4 5
12.622093 13.755
3.1555233
Coefficients
Standard Error
t Stat
P-value
Lower 95%
Upper 95%
Upper 95.0%
Intercept
7.5217108
4.1883776
1.7958531 0.5991857
0.1469459
-4.1070897
19.150511
19.150511
FIHP
-0.0711625
0.1187654
0.5813337
-0.400908
0.258583
-0.400908
0.258583
INTERPRETATIONS OF THE REGRESSED OUTPUT: R square is 8% which clearly states that the regressed model is a not very good model because it clearly states that 92% of the changes in ROCE cannot be explained by the finished goods inventory holding period. Standard error shows that how much is the data scattered which is around 1.77 which is essential in plotting the graph because the variation is very less. The x variable is in negative which clearly states that there is an inverse relationship between finished inventory holding period and ROCE because an increase in the value of the current ratio will lead to a decline in the value of ROCE as the equation here is Y=7.520.07X X here stand for coefficient of finished goods inventory holding period The p value is around 0.58 which shows that the value of the slope is not very significant. The lesser the p value the more significant is the slope but here p-value is more than 0.5 which shows irrelevancy. Correlation is coming out to be negative 0.28 which shows the inverse relationship between the ROCE and finished goods inventory holding period Average collection period : As per the theory we know that a firma always tries to minimise its average collection period because the lesser is the average collection period , more quickly is the cash generated in the business . Our analysis shows that :
Regression Statistics Multiple R 0.1647277
0.0271352
-0.216081 1.8290541 6
MS 0.3732448 3.3454388
F 0.1115683
INTERPRETATIONS OF THE REGRESSED OUTPUT: R square is 2.7 percent which clearly states that the regressed model is a not good model because it clearly states that 97.3 percent of the changes in ROCE cannot be explained by the average collection period. Standard error shows that how much is the data scattered which is around 1.82 which means that around 1.82 percent of the data is scattered. The x variable is in negative which clearly states that there is an inverse relationship between average collection period and ROCE because an increase in the value of the average collection period will lead to a decline in the value of ROCE as the equation here is Y=6.177 0.027X X here stand for coefficient of average collection period The p value is around 0.755 which shows that the value of the slope is not significant. The lesser the p value the more significant is the slope. Correlation is coming out to be negative 0.164 which shows the inverse relationship between the ROCE and finished goods inventory holding period
Average payment period : The average payment period refers to the time which is taken by a company in order to pay off its creditors in a working capital cycle, the average payment period should always be prolonged , however, care should be taken that it does not effect the business at large . Our analysis:
Regression Statistics Multiple R R Square Adjusted Square R 0.7176738 0.8812941 6 0.8798517 0.774139
MS 10.648283 0.7766794
F 13.710011
INTERPRETATIONS OF THE REGRESSED OUTPUT: R square is 77 percent which clearly states that the regressed model is a good model which clearly states that 77 percent of the changes in ROCE can be explained by the average payment period Standard error shows that how much is the data scattered which is around 6.41which means that around 6.41 percent of the data is scattered. The x variable is in negative which clearly states that there is an indirect relationship between average payment period and ROCE because an increase in the value of the average payment period will lead to an decrease in the value of ROCE as the equation here is
Y=14.3 0.086X X here stand for coefficient of average payment period The p value is around 0.02 which shows that the value of the slope is significant. The lesser the p value the more significant is the slope Correlation is coming out to be negative 0.879 which shows the indirect relationship between the ROCE and APP.
Multiple R
df
SS
MS 9.701994 08 1.013251 48
F 9.575109 7
Regression
9.701994079
Residual Total
4 5
4.053005921 13.755
Standard Error
t Stat 9.412576 57
Lower 95.0%
0.738064195
4.897891
3.04471E-05
-3.094367
-0.00017874
-0.000179
INTERPRETATIONS OF THE REGRESSED OUTPUT: R square is 70.5 percent which clearly states that the regressed model is a good model because it clearly states that 70.5 percent of the changes in ROCE can be explained by the change in Net Working Capital Standard error shows that how much is the data scattered which is around 1 which means that around 1 percent of the data is scattered. The x variable is in negative which clearly states that there is an inverse relationship between Net Working Capital and ROCE because an increase in the value of the average collection period will lead to a decline in the value of ROCE but the slope is approximately ~0, which means that the impact is not very large as the equation here is Y=6.94 (9.4 x 10-5X) X here stand for coefficient of Net Working Capital The p value is around 0.03 which shows that the value of the slope is significant. The lesser the p value the more significant is the slope Correlation is coming out to be negative 0.839 which shows the inverse relationship between the ROCE and Net Working Capital
Current ratio: Current ratio is defined as the total liquidity of the firm. The ideal current ratio is 2 :1 which means that ideally the current assets should be more , should be twice than that of current liabilities as the ratio states that current ratio = current assets /current liabilities higher the liquidity of the firm lower is the risk ,lower is the profit.
Regression Statistics Multiple R R Square Adjusted Square R -0.1983819 4.4546163 6 0.2032105 0.0412945
MS 3.4189085 19.843606
F 0.1722927
t Stat 0.3137006
P-value 0.7694267
-7.3477509
17.701945
-0.4150816
0.69938
-56.496229
41.800728
-56.496229
41.800728
Interpretations of the regressed output : R square is roughly 9 percent which shows that the regressed model is not relevant because that means that 9 percent of the variation in ROCE IS explained by current ratio Standard error basically shows that how much is the data dispersed which is around 6.225 The x variable is in negative which clearly states that there is an inverse relationship between current ratio and ROCE because an increase in the value of the current ratio will lead to a decline in the value of ROCE as the equation here is
Y=44.21845--17.95660X X here stand for current ratio The p value is around 0.5 which shows that the value of the slope is significant. Correlation is coming out to be negative between the ROCE and the current ratio 0.03 which shows the inverse relationship
This can also be studied by the scattered diagram above here we study the trend line between ROCE and current ratio the trend line is moving downwards which clearly states that with the increase in the current ratio the ROCE decreases.
MS 74.565124 2.0570524
F 36.248528
ANOVA
MS 0.0132716 20.695015
F 0.0006413
Significance F 0.9810097
INTERPRETATIONS OF THE REGRESSED OUTPUT: R square is 85 percent which clearly states that the regressed model is a very good model because it clearly states that 85 percent of the changes in ROCE can be explained by the finished goods inventory holding period. Standard error shows that how much is the data scattered which is around 2.517 which is essential in plotting the graph because the variation is very less. The x variable is in negative which clearly states that there is an inverse relationship between finished inventory holding period and ROCE because an increase in the value of the current ratio will lead to a decline in the value of ROCE as the equation here is Y=72.462671.60424X X here stand for coefficient of finished goods inventory holding period The p value is around 0.008 which shows that the value of the slope is significant. The lesser the p value the more significant is the slope Correlation is coming out to be negative 0.992 which shows the inverse relationship between the ROCE and finished goods inventory holding period This can also be studied by the scattered diagram above here we study the trend line between ROCE and finished goods inventory holding period, the trend line is moving downwards which clearly states that with the increase in the the finished goods inventory holding period the ROCE decreases. Average collection period :
As per the theory we know that a firm always tries to minimise its average collection period because the lesser is the average collection period , more quickly is the cash generated in the business . Our analysis shows that :
Regression Statistics Multiple R R Square Adjusted Square R -0.2320304 4.5167223 6 0.1198987 0.0143757
MS 1.1902113 20.400781
F 0.0583415
INTERPRETATIONS OF THE REGRESSED OUTPUT: R square is 41 percent which clearly states that the regressed model is a good model because it clearly states that 41 percent of the changes in ROCE can be explained by the average collection period Standard error shows that how much is the data scattered which is around 5 which means that around 5 percent of the data is scattered. The x variable is in negative which clearly states that there is an inverse relationship between average collection period and ROCE because an increase in the value of the average collection period will lead to a decline in the value of ROCE as the equation here is Y=63.2601.959X
X here stand for coefficient of average collection period The p value is around 0.004 which shows that the value of the slope is significant. The lesser the p value the more significant is the slope Correlation is coming out to be negative 0.64271 which shows the inverse relationship between the ROCE and finished goods inventory holding period This can also be studied by the scattered diagram above here we study the trend line between ROCE and AVERAGE COLLECTION PERIOD, the trend line is moving downwards which clearly states that with the increase in the average collection period the ROCE decreases.
Average payment period : The average payment period refers to the time which is taken by a company in order to pay off its creditors in a working capital cycle, the average payment period should always be prolonged , however, care should be taken that it does not effect the business at large . Our analysis:
Regression Statistics Multiple R R Square Adjusted Square R 0.4488355 3.0210178 6 0.7477088 0.5590684
MS 46.287139 9.1265485
F 5.0717025
R square is 3 percent which clearly states that the regressed model is a model be which clearly states that 3 percent of the changes in ROCE can be explained by the average payment period Standard error shows that how much is the data scattered which is around 6.41which means that around 6.5 percent of the data is scattered.
The x variable is in positive which clearly states that there is an direct relationship between average payment period and ROCE because an increase in the value of the average payment period will lead to an increase in the value of ROCE as the equation here is Y=13.56+0.283X X here stand for coefficient of average payment period The p value is around 0.004 which shows that the value of the slope is significant. The lesser the p value the more significant is the slope Correlation is coming out to be positive 0.188 which shows the direct relationship between the ROCE and APP This can also be studied by the scattered diagram above here we study the trend line between ROCE and AVERAGE PAYMENT PERIOD, the trend line is moving UPWARDS which clearly states that with the increase in the average payment period the ROCE increases
Adjusted Square
R 0.6134697 2.5299064 6
MS 57.191628 6.4004264
F 8.9355965
t Stat -2.1874884
P-value 0.0939552
0.0002459
8.225E-05
2.9892468
0.0403681
1.75E-05
0.0004742
1.75E-05
0.0004742
R square is 41 percent which clearly states that the regressed model is a good model because it clearly states that 41 percent of the changes in ROCE can be explained by the change in Net Working Capital Standard error shows that how much is the data scattered which is around 5 which means that around 5 percent of the data is scattered.
The x variable is in negative which clearly states that there is an inverse relationship between Net Working Capital and ROCE because an increase in the value of the average collection period will lead to a decline in the value of ROCE as the equation here is Y=63.2601.959X X here stand for coefficient of Net Working Capital The p value is around 0.004 which shows that the value of the slope is significant. The lesser the p value the more significant is the slope Correlation is coming out to be negative 0.64271 which shows the inverse relationship between the ROCE and Net Working Capital This can also be studied by the scattered diagram above here we study the trend line between ROCE and Net Working Capital,
the trend line is moving downwards which clearly states that with the increase in the Net
Current ratio:
Current ratio is defined as the total liquidity of the firm. The ideal current ratio is 2 :1 which means that ideally the current assets should be more , should be twice than that of current liabilities as the ratio states that current ratio = current assets /current liabilities higher the liquidity of the firm lower is the risk ,lower is the profit.
Regression Statistics Multiple R R Square Adjusted R Square Standard Error Observations 0.0285401 0.0008145 -0.2489818
4.539488 6
ANOVA df Regression Residual Total 1 4 5 SS 0.0671951 82.427805 82.495 MS 0.0671951 20.606951 F 0.0032608 Significance F 0.9572015
Coefficients
t Stat
P-value
Lower 95%
Intercept
7.8496847
1.0841347
0.3392809
-12.253184
-0.7065729
12.373572
0.0571034
0.9572015
-35.061117
33.647971
33.647971
R square is roughly 9 percent which shows that the regressed model is not relevant because that means that 9 percent of the variation in ROCE IS explained by current ratio Standard error basically shows that how much is the data dispersed which is around 6.225 The x variable is in negative which clearly states that there is an inverse relationship between current ratio and ROCE because an increase in the value of the current ratio will lead to a decline in the value of ROCE as the equation here is Y=44.21845--17.95660X X here stand for current ratio The p value is around 0.5 which shows that the value of the slope is significant. Correlation is coming out to be negative between the ROCE and the current ratio 0.03 which shows the inverse relationship
This can also be studied by the scattered diagram above here we study the trend line between ROCE and current ratio the trend line is moving downwards which clearly states that with the increase in the current ratio the ROCE decreases.
2.7108355 6
Residual Total
4 5
29.394516 82.495
7.348629
Coefficients
t Stat
P-value
Lower 95%
Intercept
-39.890443
-2.260616
0.0866214
-88.883118
RIHP
1.0328824
0.384242
2.6881041
0.0547657
-0.0339443
2.0997091
2.0997091
Regression Statistics Multiple R R Square Adjusted R Square Standard Error Observations 0.1335984 0.0178485 -0.2276893
4.5006274 6
ANOVA df Regression Residual Total 1 4 5 SS 1.4724137 81.022586 82.495 MS 1.4724137 20.255647 F 0.0726915 Significance F 0.8007947
Coefficients
t Stat
P-value
Lower 95%
Intercept
8.8955898
1.5694984 0.2696136
0.1916157
-6.8407221
FIHP
-0.0869964
0.3226705
0.8007947
-0.9828734
0.8088806
0.8088806
INTERPRETATIONS OF THE REGRESSED OUTPUT: R square is 85 percent which clearly states that the regressed model is a very good model because it clearly states that 85 percent of the changes in ROCE can be explained by the finished goods inventory holding period. Standard error shows that how much is the data scattered which is around 2.517 which is essential in plotting the graph because the variation is very less. The x variable is in negative which clearly states that there is an inverse relationship between finished inventory holding period and ROCE because an increase in the value of the current ratio will lead to a decline in the value of ROCE as the equation here is Y=72.462671.60424X X here stand for coefficient of finished goods inventory holding period
The p value is around 0.008 which shows that the value of the slope is significant. The lesser the p value the more significant is the slope Correlation is coming out to be negative 0.992 which shows the inverse relationship between the ROCE and finished goods inventory holding period This can also be studied by the scattered diagram above here we study the trend line between ROCE and finished goods inventory holding period, the trend line is moving downwards which clearly states that with the increase in the the finished goods inventory holding period the ROCE decreases. Average collection period : As per the theory we know that a firm always tries to minimise its average collection period because the lesser is the average collection period , more quickly is the cash generated in the business . Our analysis shows that :
Regression Statistics Multiple R R Square Adjusted R Square Standard Error Observations 0.4451523 0.1981606 -0.0022993
4.0665631 6
ANOVA df Regression Residual Total 1 4 5 SS 16.347258 66.147742 82.495 MS 16.347258 16.536935 F 0.9885301 Significance F 0.3763773
Coefficients
t Stat
P-value
Lower 95%
Intercept
16.78565
1.7603711 0.9942485
0.1531505
-9.6885604
ACP
-0.8461314
0.8510261
0.3763773
-3.2089585
1.5166957
1.5166957
INTERPRETATIONS OF THE REGRESSED OUTPUT: R square is 41 percent which clearly states that the regressed model is a good model because it clearly states that 41 percent of the changes in ROCE can be explained by the average collection period Standard error shows that how much is the data scattered which is around 5 which means that around 5 percent of the data is scattered. The x variable is in negative which clearly states that there is an inverse relationship between average collection period and ROCE because an increase in the value of the average collection period will lead to a decline in the value of ROCE as the equation here is Y=63.2601.959X X here stand for coefficient of average collection period The p value is around 0.004 which shows that the value of the slope is significant. The lesser the p value the more significant is the slope Correlation is coming out to be negative 0.64271 which shows the inverse relationship between the ROCE and finished goods inventory holding period This can also be studied by the scattered diagram above here we study the trend line between ROCE and AVERAGE COLLECTION PERIOD, the trend line is moving downwards which clearly states that with the increase in the average collection period the ROCE decreases.
Average payment period : The average payment period refers to the time which is taken by a company in order to pay off its creditors in a working capital cycle, the average payment period should always be prolonged , however, care should be taken that it does not effect the business at large . Our analysis:
0.1978432 -0.0026959
4.0673678 6
ANOVA df Regression Residual Total 1 4 5 SS 16.321078 66.173922 82.495 MS 16.321078 16.54348 F 0.9865565 Significance F 0.3768063
Coefficients
t Stat
P-value
Lower 95%
Intercept
18.93834
1.6207486 0.9932555
0.1803879
-13.504238
APP
-0.0795316
0.0800716
0.3768063
-0.3018461
0.1427829
0.1427829
R square is 3 percent which clearly states that the regressed model is a model be which clearly states that 3 percent of the changes in ROCE can be explained by the average payment period Standard error shows that how much is the data scattered which is around 6.41which means that around 6.5 percent of the data is scattered.
The x variable is in positive which clearly states that there is an direct relationship between average payment period and ROCE because an increase in the value of the average payment period will lead to an increase in the value of ROCE as the equation here is Y=13.56+0.283X X here stand for coefficient of average payment period The p value is around 0.004 which shows that the value of the slope is significant. The lesser the p value the more significant is the slope Correlation is coming out to be positive 0.188 which shows the direct relationship between the ROCE and APP
This can also be studied by the scattered diagram above here we study the trend line between ROCE and AVERAGE PAYMENT PERIOD, the trend line is moving UPWARDS which clearly states that with the increase in the average payment period the ROCE increases
Regression Statistics Multiple R R Square Adjusted R Square Standard Error Observations 0.6129668 0.3757283 0.2196604
3.5881504 6
ANOVA df Regression Residual Total 1 4 5 SS 30.995707 51.499293 82.495 MS 30.995707 12.874823 F 2.4074666 Significance F 0.1957043
t Stat 3.3418283
P-value 0.0287868
0.0001557
0.0001004
1.5516013
0.1957043
-0.0001229
0.0004344
0.0004344
R square is 41 percent which clearly states that the regressed model is a good model because it clearly states that 41 percent of the changes in ROCE can be explained by the change in Net Working Capital Standard error shows that how much is the data scattered which is around 5 which means that around 5 percent of the data is scattered.
The x variable is in negative which clearly states that there is an inverse relationship between Net Working Capital and ROCE because an increase in the value of the average collection period will lead to a decline in the value of ROCE as the equation here is Y=63.2601.959X X here stand for coefficient of Net Working Capital The p value is around 0.004 which shows that the value of the slope is significant. The lesser the p value the more significant is the slope Correlation is coming out to be negative 0.64271 which shows the inverse relationship between the ROCE and Net Working Capital This can also be studied by the scattered diagram above here we study the trend line between ROCE and Net Working Capital, the trend line is moving downwards which clearly states that with the increase in the Net
Current ratio:
Current ratio is defined as the total liquidity of the firm. The ideal current ratio is 2 :1 which means that ideally the current assets should be more , should be twice than that of current liabilities as the ratio states that current ratio = current assets /current liabilities higher the liquidity of the firm lower is the risk ,lower is the profit.
Regression Statistics Multiple R R Square Adjusted R Square Standard Error Observations 0.7982821 0.6372543
0.5465679
7.0185652 6
MS 346.1523 49.260258
F 7.0270096
Coefficients
Standard Error
t Stat 2.0839635
P-value
Lower 95%
Upper 95%
Upper 95.0%
-54.709995
26.252856
0.1055486
-127.59961
18.179619
18.179619
42.697251
16.106999
2.6508507
0.0569312
-2.0229484
87.41745
87.41745
R square is roughly 9 percent which shows that the regressed model is not relevant because that means that 9 percent of the variation in ROCE IS explained by current ratio Standard error basically shows that how much is the data dispersed which is around 6.225 The x variable is in negative which clearly states that there is an inverse relationship between current ratio and ROCE because an increase in the value of the current ratio will lead to a decline in the value of ROCE as the equation here is Y=44.21845--17.95660X X here stand for current ratio The p value is around 0.5 which shows that the value of the slope is significant. Correlation is coming out to be negative between the ROCE and the current ratio 0.03 which shows the inverse relationship
This can also be studied by the scattered diagram above here we study the trend line between ROCE and current ratio the trend line is moving downwards which clearly states that with the increase in the current ratio the ROCE decreases.
-0.0374336
10.61628 6
df Regression Residual 1 4
SS 92.371709 450.82162
MS 92.371709 112.70541
F 0.8195854
Total
543.19333
Coefficients
Standard Error
t Stat
P-value
Lower 95%
Upper 95%
Upper 95.0%
Intercept
48.511375
37.854528
1.2815211 0.9053096
0.2692551
-56.589643
153.61239
153.61239
RIHP
-0.4124965
0.4556413
0.4165004
-1.6775596
0.8525667
0.8525667
0.5410124 0.2926944
0.115868
9.8005572 6
MS 158.98965 96.050922
F 1.6552641
Coefficients
Standard Error
t Stat
P-value
Lower 95%
Upper 95%
Upper 95.0%
Intercept
61.106059
36.471069
1.6754666 1.2865707
0.1691523
-40.153862
162.36598
162.36598
FIHP
-0.7698387
0.5983648
0.2676571
-2.4311658
0.8914885
0.8914885
INTERPRETATIONS OF THE REGRESSED OUTPUT: R square is 85 percent which clearly states that the regressed model is a very good model because it clearly states that 85 percent of the changes in ROCE can be explained by the finished goods inventory holding period. Standard error shows that how much is the data scattered which is around 2.517 which is essential in plotting the graph because the variation is very less. The x variable is in negative which clearly states that there is an inverse relationship between finished inventory holding period and ROCE because an increase in the value of the current ratio will lead to a decline in the value of ROCE as the equation here is Y=72.462671.60424X X here stand for coefficient of finished goods inventory holding period The p value is around 0.008 which shows that the value of the slope is significant. The lesser the p value the more significant is the slope
Correlation is coming out to be negative 0.992 which shows the inverse relationship between the ROCE and finished goods inventory holding period This can also be studied by the scattered diagram above here we study the trend line between ROCE and finished goods inventory holding period, the trend line is moving downwards which clearly states that with the increase in the the finished goods inventory holding period the ROCE decreases. Average collection period : As per the theory we know that a firm always tries to minimise its average collection period because the lesser is the average collection period , more quickly is the cash generated in the business . Our analysis shows that :
Regression Statistics Multiple R R Square Adjusted R Square Standard Error Observations 0.9461511 0.8952018
0.8690023
3.7724552 6
MS 486.26766 14.231418
F 34.168602
P-value 0.0021195
ACP
-2.1651028
0.3703948
0.0042715
-3.1934838
R square is 41 percent which clearly states that the regressed model is a good model because it clearly states that 41 percent of the changes in ROCE can be explained by the average collection period Standard error shows that how much is the data scattered which is around 5 which means that around 5 percent of the data is scattered. The x variable is in negative which clearly states that there is an inverse relationship between average collection period and ROCE because an increase in the value of the average collection period will lead to a decline in the value of ROCE as the equation here is Y=63.2601.959X X here stand for coefficient of average collection period The p value is around 0.004 which shows that the value of the slope is significant. The lesser the p value the more significant is the slope Correlation is coming out to be negative 0.64271 which shows the inverse relationship between the ROCE and finished goods inventory holding period This can also be studied by the scattered diagram above here we study the trend line between ROCE and AVERAGE COLLECTION PERIOD, the trend line is moving downwards which clearly states that with the increase in the average collection period the ROCE decreases.
Average payment period : The average payment period refers to the time which is taken by a company in order to pay off its creditors in a working capital cycle, the average payment period should always be prolonged , however, care should be taken that it does not effect the business at large . Our analysis:
0.5536239 6.9637419
Standard
Error Observations 6
MS 349.21853 48.493702
F 7.2013171
t Stat 3.6162692
P-value 0.0224313
APP
-0.4832939
0.1800965
-2.683527
0.0550266
-0.9833221
0.0167342
0.0167342
R square is 3 percent which clearly states that the regressed model is a model be which clearly states that 3 percent of the changes in ROCE can be explained by the average payment period Standard error shows that how much is the data scattered which is around 6.41which means that around 6.5 percent of the data is scattered.
The x variable is in positive which clearly states that there is an direct relationship between average payment period and ROCE because an increase in the value of the average payment period will lead to an increase in the value of ROCE as the equation here is Y=13.56+0.283X X here stand for coefficient of average payment period The p value is around 0.004 which shows that the value of the slope is significant. The lesser the p value the more significant is the slope Correlation is coming out to be positive 0.188 which shows the direct relationship between the ROCE and APP This can also be studied by the scattered diagram above here we study the trend line between ROCE and AVERAGE PAYMENT PERIOD, the trend line is moving UPWARDS which clearly states that with the increase in the average payment period the ROCE increases
Regression Statistics Multiple R R Square Adjusted R Square Standard Error Observations 0.5393867 0.290938
0.1136725
9.8127181 6
MS 158.03559 96.289436
F 1.6412557
Coefficients
Standard Error
t Stat
P-value
Lower 95%
Upper 95%
Upper 95.0%
36.56418
17.70775
2.0648688
0.1078555
-12.600415
85.728776
85.728776
-0.0001914
0.0001494
-1.281115
0.269384
-0.0006061
0.0002233
0.0006061
0.0002233
R square is 41 percent which clearly states that the regressed model is a good model because it clearly states that 41 percent of the changes in ROCE can be explained by the change in Net Working Capital Standard error shows that how much is the data scattered which is around 5 which means that around 5 percent of the data is scattered.
The x variable is in negative which clearly states that there is an inverse relationship between Net Working Capital and ROCE because an increase in the value of the average collection period will lead to a decline in the value of ROCE as the equation here is Y=63.2601.959X X here stand for coefficient of Net Working Capital The p value is around 0.004 which shows that the value of the slope is significant. The lesser the p value the more significant is the slope Correlation is coming out to be negative 0.64271 which shows the inverse relationship between the ROCE and Net Working Capital This can also be studied by the scattered diagram above here we study the trend line between ROCE and Net Working Capital, the trend line is moving downwards which clearly states that with the increase in the Net
Current ratio:
Current ratio is defined as the total liquidity of the firm. The ideal current ratio is 2 :1 which means that ideally the current assets should be more , should be twice than that of current liabilities as the ratio states that current ratio = current assets /current liabilities higher the liquidity of the firm lower is the risk ,lower is the profit.
Regression Statistics Multiple R R Square Adjusted R Square Standard Error Observations 0.5546638 0.307652
0.134565
2.3168956 6
MS 9.5413133 5.368005
F 1.7774412
Coefficients
Standard Error
t Stat
P-value
Lower 95%
Upper 95%
Upper 95.0%
18.622102
6.9320608
2.6863731 1.3332071
0.0548642
-0.6243844
37.868588
37.868588
-14.672172
11.005171
0.253326
-45.227424
15.88308
15.88308
R square is roughly 9 percent which shows that the regressed model is not relevant because that means that 9 percent of the variation in ROCE IS explained by current ratio Standard error basically shows that how much is the data dispersed which is around 6.225 The x variable is in negative which clearly states that there is an inverse relationship between current ratio and ROCE because an increase in the value of the current ratio will lead to a decline in the value of ROCE as the equation here is Y=44.21845--17.95660X X here stand for current ratio The p value is around 0.5 which shows that the value of the slope is significant. Correlation is coming out to be negative between the ROCE and the current ratio 0.03 which shows the inverse relationship
This can also be studied by the scattered diagram above here we study the trend line between ROCE and current ratio the trend line is moving downwards which clearly states that with the increase in the current ratio the ROCE decreases.
-0.195363
2.7229466 6
df Regression Residual 1 4
SS 1.3555816 29.657752
MS 1.3555816 7.4144379
F 0.18283
Total
31.013333
Coefficients
Standard Error
t Stat
P-value
Lower 95%
Upper 95%
Upper 95.0%
Intercept
1.7010758
18.19545
0.0934891
0.9300106
-48.817593
52.219745
52.219745
RIHP
0.0783875
0.1833257
0.4275862
0.6909664
-0.4306061
0.5873811
0.5873811
0.8726141 0.7614554
0.7018192
1.3599691 6
MS 23.615269 1.849516
F 12.768351
Coefficients
Standard Error
P-value
Lower 95%
Upper 95%
Upper 95.0%
Intercept FIHP
-7.5259621 0.4983176
4.7877676 0.1394565
0.1910704 0.0233072
-20.818936 0.1111242
5.7670119 0.8855109
5.7670119 0.8855109
INTERPRETATIONS OF THE REGRESSED OUTPUT: R square is 85 percent which clearly states that the regressed model is a very good model because it clearly states that 85 percent of the changes in ROCE can be explained by the finished goods inventory holding period. Standard error shows that how much is the data scattered which is around 2.517 which is essential in plotting the graph because the variation is very less. The x variable is in negative which clearly states that there is an inverse relationship between finished inventory holding period and ROCE because an increase in the value of the current ratio will lead to a decline in the value of ROCE as the equation here is Y=72.462671.60424X X here stand for coefficient of finished goods inventory holding period The p value is around 0.008 which shows that the value of the slope is significant. The lesser the p value the more significant is the slope
Correlation is coming out to be negative 0.992 which shows the inverse relationship between the ROCE and finished goods inventory holding period This can also be studied by the scattered diagram above here we study the trend line between ROCE and finished goods inventory holding period, the trend line is moving downwards which clearly states that with the increase in the the finished goods inventory holding period the ROCE decreases. Average collection period : As per the theory we know that a firm always tries to minimise its average collection period because the lesser is the average collection period , more quickly is the cash generated in the business . Our analysis shows that :
Regression Statistics Multiple R R Square Adjusted R Square Standard Error Observations 0.587305 0.3449271
0.1811589
2.2536633 6
MS 10.69734 5.0789985
F 2.1061907
Coefficients
Standard Error
t Stat
P-value
Lower 95%
Upper 95%
Upper 95.0%
Intercept
3.2759552
4.3638073
0.7507103
0.4945761
-8.8399161
15.391827
15.391827
ACP
0.7869548
0.5422518
1.4512721
0.2203313
-0.7185774
2.2924871
2.2924871
R square is 41 percent which clearly states that the regressed model is a good model because it clearly states that 41 percent of the changes in ROCE can be explained by the average collection period Standard error shows that how much is the data scattered which is around 5 which means that around 5 percent of the data is scattered. The x variable is in negative which clearly states that there is an inverse relationship between average collection period and ROCE because an increase in the value of the average collection period will lead to a decline in the value of ROCE as the equation here is Y=63.2601.959X X here stand for coefficient of average collection period The p value is around 0.004 which shows that the value of the slope is significant. The lesser the p value the more significant is the slope Correlation is coming out to be negative 0.64271 which shows the inverse relationship between the ROCE and finished goods inventory holding period This can also be studied by the scattered diagram above here we study the trend line between ROCE and AVERAGE COLLECTION PERIOD, the trend line is moving downwards which clearly states that with the increase in the average collection period the ROCE decreases.
Average payment period : The average payment period refers to the time which is taken by a company in order to pay off its creditors in a working capital cycle, the average payment period should always be prolonged , however, care should be taken that it does not effect the business at large . Our analysis:
0.5818279 1.6105223
Standard
Error Observations 6
MS 20.638205 2.593782
F 7.9568002
P-value 0.0112177
APP
-0.1502162
0.0532534
0.0477902
-0.2980714
-0.002361
-0.002361
R square is 3 percent which clearly states that the regressed model is a model be which clearly states that 3 percent of the changes in ROCE can be explained by the average payment period Standard error shows that how much is the data scattered which is around 6.41which means that around 6.5 percent of the data is scattered.
The x variable is in positive which clearly states that there is an direct relationship between average payment period and ROCE because an increase in the value of the average payment period will lead to an increase in the value of ROCE as the equation here is Y=13.56+0.283X X here stand for coefficient of average payment period The p value is around 0.004 which shows that the value of the slope is significant. The lesser the p value the more significant is the slope Correlation is coming out to be positive 0.188 which shows the direct relationship between the ROCE and APP This can also be studied by the scattered diagram above here we study the trend line between ROCE and AVERAGE PAYMENT PERIOD, the trend line is moving UPWARDS which clearly states that with the increase in the average payment period the ROCE increases
Regression Statistics Multiple R R Square Adjusted Square Standard Error Observations R 0.5594042 0.8046884 0.6475234
1.6531391 6
MS 20.081858 2.7328689
F 7.3482697
t Stat 0.7758306
P-value 0.4811652
0.0003635
0.0001341
2.7107692
0.0534947
-8.808E-06
0.0007359
-8.808E06
0.0007359
R square is 41 percent which clearly states that the regressed model is a good model because it clearly states that 41 percent of the changes in ROCE can be explained by the change in Net Working Capital Standard error shows that how much is the data scattered which is around 5 which means that around 5 percent of the data is scattered.
The x variable is in negative which clearly states that there is an inverse relationship between Net Working Capital and ROCE because an increase in the value of the average collection period will lead to a decline in the value of ROCE as the equation here is Y=63.2601.959X X here stand for coefficient of Net Working Capital The p value is around 0.004 which shows that the value of the slope is significant. The lesser the p value the more significant is the slope Correlation is coming out to be negative 0.64271 which shows the inverse relationship between the ROCE and Net Working Capital This can also be studied by the scattered diagram above here we study the trend line between ROCE and Net Working Capital, the trend line is moving downwards which clearly states that with the increase in the Net