Impact of exchange rate and Interest Rate on the Textile Sector in Pakistan By Looking at the Profitability Ratios of Return on Assets, Return on Equity, Net Profitability & Earning Per SharE

Abstract

The following thesis is an exploratory study that we have developed on the four more profitability ratios namely the interest rates and the exchange rates. These independent variables are classified as main key players on the firm’s profitability. The primary goal is to investigate the effect of interest rates and currency rates on the textile industry's profitability. This thesis is based on a qualitative as well quantitative method. I have done extensive Literature review and statistical analysis in this report. One theory was utilized to theoretically explain the relationship between the variables, and then the effect of exchange rate and inflation rate on profitably was shown in the example of Pakistan. The hypothesis suggests that there is a connection between the variables of interest rates as well as rate of exchange specifically on profitability of the firms. The regression analysis and panel regression methods are utilized to clearly explore the connection between the endogenous variables. The tests yielded significant findings at the 0.05 level. The findings are essential and noteworthy since there is a strong relationship between the variables. I have explained in detail how the interest rates were gathered as well the profitability ratios. I have chosen 10 listed textile companies on the Pakistan Stock Exchange and then analyzed their data. I have taken the exchange rates from the State bank website.