The Impact of the Financial Ratios on Financial Performance of Korean Service Industry in Accordance with Real Estate Dependence
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[Purpose] This paper analyzes the impact of financial ratios on the financial performance of two different types of service industries, called Group 1 and Group 2. Group 1 consists of maritime transport, air transport, hotel and car rental industries, which depend on real estate as a major source of income, while Group 2 consists of travel agencies, trading companies and information service industries, which do not depend on real estate as a major source of income. [Methodology] This study primarily analyzed 12 representative financial ratios, divided into four categories：profitability ratios, stability ratios, growth ratios, and activity ratios. Secondary data based on the Value Search from 2015 to 2019, was analyzed, and a multiple regression model was employed using SPSS 26.0. [Findings] The analysis showed that for Group 1, focusing on increasing low asset turnover with a relatively low debt ratio is a good way to improve a company’s profitability；for Group 2, focusing on relatively high asset turnover with relatively high debt ratio can improve a company’s profitability. [Implications] The financial performance of service industry was impacted by different types of financial ratios according to real estate dependence as major source of income.
Abstract
[Purpose] This paper analyzes the impact of financial ratios on the financial performance of two different types of service industries, called Group 1 and Group 2. Group 1 consists of maritime transport, air transport, hotel and car rental industries, which depend on real estate as a major source of income, while Group 2 consists of travel agencies, trading companies and information service industries, which do not depend on real estate as a major source of income. [Methodology] This study primarily analyzed 12 representative financial ratios, divided into four categories：profitability ratios, stability ratios, growth ratios, and activity ratios. Secondary data based on the Value Search from 2015 to 2019, was analyzed, and a multiple regression model was employed using SPSS 26.0. [Findings] The analysis showed that for Group 1, focusing on increasing low asset turnover with a relatively low debt ratio is a good way to improve a company’s profitability；for Group 2, focusing on relatively high asset turnover with relatively high debt ratio can improve a company’s profitability. [Implications] The financial performance of service industry was impacted by different types of financial ratios according to real estate dependence as major source of income.
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