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This work is licensed under a Creative Commons Attribution-NonCommercial 4.0 International License
Article
The Impact of Turnover Ratios on Jordanian Services Sectors’ Performance
Author(s)
Lina Warrad, Rania Al Omari
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DOI:10.17265/1548-6583/2015.02.001
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ABSTRACT
Profitability ratios are a group of financial ratios that indicate how much profit a business is earning within a certain context, while asset utilization ratios indicate how efficient a business is in operating its assets to generate cash. The difference between profitability ratios and turnover ratios is the fact that turnovers are more specific. While profitability ratios measure overall performance in terms of profits, asset utilization ratios focus on specific measurements within the business. We conduct this study to verify the impact of turnover ratios on Jordanian services sectors’ performance during the period from 2009 to 2012. The study showed that there is no significant impact of turnover ratios on Jordanian services sectors’ profitability, and by testing the main and sub hypotheses, the study revealed that there is no significant impact of turnover ratios on Jordanian services sectors’ return on assets (ROA), there is no significant impact of working capital turnover on Jordanian services sectors’ ROA, there is no significant impact of total asset turnover on Jordanian services sectors’ ROA, and there is no significant impact of fixed asset turnover on Jordanian services sectors’ ROA. Also, the study showed that there is no significant impact of turnover ratios on Jordanian services sectors’ return on equity (ROE), there is no significant impact of working capital turnover on Jordanian services sectors’ ROE, there is no significant impact of total asset turnover on Jordanian services sectors’ ROE, and there is no significant impact of fixed asset turnover on Jordanian services sectors’ ROE. Moreover, the study concluded that the educational services sector has the lowest working capital turnover and healthcare services sector has the highest. In addition, we find that the hotels and tourism sector has the lowest total asset turnover ratio, while the utilities and energy sector has the highest and that the hotels and tourism sector has the lowest fixed asset turnover, while the utilities and energy sector has the highest. The transportation sector has the lowest ROA and technology and communication sector has the highest. Finally, we find that transportation sector has the lowest ROE and the technology and communication sector has the highest.
KEYWORDS
working capital turnover, total asset turnover, fixed asset turnover, return on assets (ROA), return on equity (ROE), Amman Stock Exchange (ASE)
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