I need help creating a thesis and an outline on Financial Sector Across the Eurozone. Prepare this assignment according to the guidelines found in the APA Style Guide. An abstract is required. The direction of relationship between the financial ratios and firm profitability has not been adequately established. Some of the studies indicate that certain financial ratios are positively correlated with firm profitability. other studies, however, show the contrary and contradict earlier studies. This mean s that studies on the subject must be sustained until a more satisfactory set of results are obtained or consistent results are obtained from a large number of studies on the subject. The failure to get consistent results from the relationship between financial ratios and firm profitability can also indicate that regression strategies on how to conduct the regression must be refined. Meanwhile, in 2007 or 2008, a financial crisis in the United States erupted and affected Europe. It is interesting to take a look at the latest data and find out how the crisis may have affected Europe even as we remain focused on studying the relationship between the financial ratios and firm profitability.
As pointed out earlier, the direction of the relationship between financial ratios and firm profitability are reported inconsistently in the latest studies although the studies have been indicating what variables are most important in affecting firm profitability. Martani et al. (2009) investigated the effect of financial ratios, firm size, and cash flow on the stock return. The authors used a sample of listed companies in the Indonesian Stock Market covering 780 observations. They found net profit margin, return on equity, and several other financial ratios have a positive effect on market adjusted returns. At the same time, ratios such as credit ratio, total assets turnover ratio, and other financial ratios are negatively correlated with the market adjusted returns from firms.