Exploring the Relationship between Financial Ratios and Market Stock Returns

Abstract

This paper explores the relationship between financial ratios and market stock returns of 26 Qatari listed firms from 2009 to 2015. The results of Weighted Least Square (WLS) show that earnings per share, earnings yield ratio, and dividend yield ratio have significant and positive relationship with market stock returns while market to book value ratio, return on assets, return on equity, price to earnings ratio, dividends earnings ratio, and net profit margin have insignificant relationship with market stock returns. The implications will be for policymakers of government in selecting and deciding their policies. It will also be for investors and managers to make better decisions.