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Each day thousands of investors take the risk of investing their money in a highly volatile and unknown market with the hope of increasing their capital Investment in a such a market is a risky undertaking for some investors may lose their funds and some others gain benefits. Under such circumstances, it is vitally important to identify the risks and study all related angles to reduce them for investment. One dimension of the risk and problem recognition is the nature of companies’ activities. The active companies of the Tehran Stock Exchange are involved with four types of markets; capital market, products market, money market and production forces market. Assessment of the managers’ Performance appraisal is in direct relationship with a company’s performance in the products market. The company’s performance in the products market is subject to the life cycles of the industry, goods, type and quality of products, nature of activity and the like.
Each group has a different interpretation of the financial
statements to prove the success of a special area of activity in the Stock Exchange. One of the criteria employed for this purpose is the success of financial ratios. There are over 320 companies in the Tehran Market with a classification of 70 different types of activities.
The present research, which has been conducted within a period of two years by using the regression method and Techniques, examines the relationship between stock return and profitable ratios in various areas of activities. The outcome implies that some ratios such as the returns of assets and of shareholders’ rights have meaningful relationship with stock return. By contrast, the criteria like interest growth and sales growth will not satisfactorily explain the stock return.