The Relationship Between Financial Ratios and Return of Medical Service Sector

Abstract

This study aims to: (1) to examine financial ratios and the capability to generate returns of firms in the medical services industry, and (2) investigate the relationship between financial ratios and return generation within this industry. Data were collected from 22 publicly listed firms in the medical sector on the Stock Exchange of Thailand. Secondary data were collected from the SETSMART database over a five-year period, from the first quarter of 2019 to the fourth quarter of 2023. Data analysis employed descriptive statistics (mean and standard deviation), trend analysis, and inferential statistics using Pearson’s correlation coefficient. The findings revealed that: (1) financial ratios and return-generating capabilities indicated improved liquidity and the liquidity indicators. Key indicators included current ratio, quick ratio, accounts receivable turnover, inventory turnover, accounts payable turnover, return on assets (ROA), and return on equity (ROE); and (2) the relationship between financial ratios and return generation within current ratio, quick ratio and accounts payable turnover ratio correlated to ROA and ROE significantly at the 0.05 level.