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    Financial Management Assignment-2: Birla Institute of Technology and Science, Pilani Hyderabad Campus 2017

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    Rampraveen Chamarthi
    This document provides a multiple linear regression analysis of factors affecting Maruti Suzuki India Limited's wealth maximization over 10 years. The regression used Maruti's market value added (MVA) as the dependent variable and net sales, net profit, net profit margin, gross profit margin, return on investment, return on assets, and return on equity as independent variables. The analysis found that the regression was a good fit for the data, with an R-squared value of 0.97. It also found that net profit had a statistically significant positive relationship with MVA, with a one percent increase in net profit correlating to a 105.37 crore increase in MVA. The other independent variables did not show a statistically significant relationship

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    Financial Management Assignment-2: Birla Institute of Technology and Science, Pilani Hyderabad Campus 2017

    Uploaded by

    Rampraveen Chamarthi
    12 views3 pages
    This document provides a multiple linear regression analysis of factors affecting Maruti Suzuki India Limited's wealth maximization over 10 years. The regression used Maruti's market value added (MVA) as the dependent variable and net sales, net profit, net profit margin, gross profit margin, return on investment, return on assets, and return on equity as independent variables. The analysis found that the regression was a good fit for the data, with an R-squared value of 0.97. It also found that net profit had a statistically significant positive relationship with MVA, with a one percent increase in net profit correlating to a 105.37 crore increase in MVA. The other independent variables did not show a statistically significant relationship

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    company object decision

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    Finance project

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    This document provides a multiple linear regression analysis of factors affecting Maruti Suzuki India Limited's wealth maximization over 10 years. The regression used Maruti's market value added (MVA) as the dependent variable and net sales, net profit, net profit margin, gross profit margin, return on investment, return on assets, and return on equity as independent variables. The analysis found that the regression was a good fit for the data, with an R-squared value of 0.97. It also found that net profit had a statistically significant positive relationship with MVA, with a one percent increase in net profit correlating to a 105.37 crore increase in MVA. The other independent variables did not show a statistically significant relationship

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    12 views3 pages

    Financial Management Assignment-2: Birla Institute of Technology and Science, Pilani Hyderabad Campus 2017

    Uploaded by

    Rampraveen Chamarthi
    This document provides a multiple linear regression analysis of factors affecting Maruti Suzuki India Limited's wealth maximization over 10 years. The regression used Maruti's market value added (MVA) as the dependent variable and net sales, net profit, net profit margin, gross profit margin, return on investment, return on assets, and return on equity as independent variables. The analysis found that the regression was a good fit for the data, with an R-squared value of 0.97. It also found that net profit had a statistically significant positive relationship with MVA, with a one percent increase in net profit correlating to a 105.37 crore increase in MVA. The other independent variables did not show a statistically significant relationship

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    © All Rights Reserved
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    of 3

    FINANCIAL MANAGEMENT

    ASSIGNMENT-2

    By

    SRINIVAS LIKITH R 2014AAPS302H

    NIKHILESH N M 2014AAPS282H

    MANOJ KUMAR K V 2014B3A4537H

    VIGNESH REDDY 2014A5PS811H

    BIRLA INSTITUTE OF TECHNOLOGY AND SCIENCE,


    PILANI HYDERABAD CAMPUS
    2017
    Multiple Linear Regression:
    Ten years data of MVA, Net Sales, Net profit, NPM, GPM, ROI, ROA, and ROE for the financial
    years 2006/07 till 2015/16 are collected for analyzing Maruti Suzuki India Limited’s wealth
    maximization.

    For this MVA is chosen as the major indicator of wealth creation. Taking MVA as the dependent
    variable and Net Sales, Net profit, NPM, GPM, ROI, ROA, ROE as the independent variables
    regression is made, to analyze how these factors affect the wealth creation capacity of the firm.
    The Data collected and the result of the regression is shown below.
    Analysis:
    1. The Coefficient of determination (R square) is 0.97 which makes our Data a good fit for
    our model. With this we can say our data was good enough, that we can confidently use
    the analysis for prediction of future value.
    2. The intercept for the model tells us that the market value of the company will be
    187874.13 crore even when the company makes no sales, revenue, or profit. But this
    will not be a true prediction if we consider a significance level of 5%.
    3. Similarly Net sales, NPM, GPM, ROI, ROE, ROA also does not explain their relationship
    with MVA as their p-value is much higher. This prompts us to exclude the possibility of
    relationship or causation of these dependent variables on the independent variable.
    4. Net profit has a positive relationship with MVA. This relationship is accepted with a ten
    percent significance level (p=0.0878). The coefficient of Net Profit 105.3709008 tells us
    that a one percent of increase in net profit will increase the market value of the
    company by 105.3709008 crore. Thus we could say that net profit has a positive effect
    on the wealth creation possibility of this company. The rationale behind this is, when a
    company witnesses a positive net profit, its value is eventually increased irrespective of
    its obligation to their shareholders. Thus for a company as a whole, it is an increase in its
    wealth. This lets us to conclude the positive relationship of Net sales with MVA.

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