FINANCIAL ANALYSIS OF NEPALESE MANUFACTURING COMPANIES

Abstract

This study aimed to examine the financial performance of manufacturing companies in Nepal. It employed both descriptive and causal-comparative research methods to achieve its objectives. The analysis was based on panel data from three manufacturing firms in Nepal spanning from the fiscal years 2012/13 to 2021/22. Profitability metrics like Return on Assets (ROA) and Earnings per Share (EPS) were considered as dependent variables, while independent variables included total assets, total revenue, total cost, and debt ratio. Secondary data was utilized for this analysis. The primary analytical tool used was Ordinary Least Squares (OLS) regression applied to panel data. Findings indicated that ROA was negatively influenced by total assets, total revenue, and debt ratio. Notably, while total revenue and debt ratio were not statistically significant, total assets exhibited a negative significance at the 5% level. The R-square value stands at 49.31%, indicating a substantial portion of variance in ROA can be explained by total assets, total revenue, total cost, and debt ratio, as evidenced by the statistically significant regression P-value of 0.0036 at a 0.05 significance level. Similarly, for earnings per share, the R-square value is 74.86%, with a regression P-value of 0.000, indicating a significant relationship, particularly with total assets, while total revenue, total cost, and debt ratio show insignificant impacts. These findings offer insights for both companies and policymakers, suggesting potential strategies to enhance the performance and profitability of manufacturing firms. Keywords: Profitability, ROA, EPS, Loan and advance, Total Cost, Total Revenue, Debt Ratio