Impact of Profitability on Market Price of Stock

Abstract

Abstract The purpose of this research is to examine the EPS, P/E ratio, BVPS, DY, DPS and market price of share in Nepalese development banks. It also includes structure of earning per share, BVPS, dividend yield, price earnings ratio, dividend per share and market value per share of insurance. Basically, stock price is determined by demand and supply forces. Both, the qualitative and quantitative factors determine the stock price. However, for some environmental changes, the stock exchanges have no effect. Through the financial sector has dominant position, most of the investors are not aware of the financial strength of the companies and they do not analyze company's financial indicators before they invest their funds through primary market-participating in IPO and secondary market NEPSE. This research uses Market Value per Share (MVPS) as dependent variable and experiment variables as Earnings per Share (EPS), Price Earnings ratio (PER), BVPSs, Dividend Yield (DY) and Dividend Payout Ratio (DPR). The secondary data has been collected from the annual report published by development banks for nine years’ period from 2013/14 to 2021/22. Descriptive and Casual research design is used to analyze and interpret the data using SPSS version 24. Four development banks i.e. Jyoti Bikas Bank Limited (JBBL), Garima Bikas Bank Limited (GBBL), Shangrila Bikas Bank Limited (SHBBL) and Lumbini Bikas Bank Limited (LBBL) are taken as sample out of 17 population using purposive sampling method. Multiple linear regression model has been used to show the impact of independent variables on MVPS. The result indicates that there is a positive and statistically significant relation of DPS, EPS and PER on MVPS but BVPS and DY is not significant even at significance level 0.10 with MVPS. Likewise, the regression result revealed that PER as independent variable is statistically significant at the significance level 0.01 and 0.05 but DY, DPS and EPS is not statistically significant even at 10% level of significance. Key Words: MVPS, EPS, DPS, BVPS, PER