Determinants of Firm Value: A Case Study of Chemical Industries of Pakistan

The objective of this paper is to analyze the importance of chemical industries of Pakistan and major factors which affect their working and profitability. We used secondary data, which was extracted from the database of Pakistan Stock Exchange, State Bank of Pakistan and financial statements of selected firms. The variables of study include: Return on Assets (ROA), Earning per share (EPS), Financial leverage, Firm size and Net working capital (NWC). Our findings show that the value of the firm increases with the increase in other variables like NWC and EPS etc. It is also worth noting that some of the variables like "Financial Leverage", "Firm Size" and "ROA" did not have much influence on the stock prices. However, strong correlation was found between all independent and dependent variables except financial leverage.