Evaluatingthe relationship betweenliquidityandactivityratiosandstock returnsin thepharmaceutical and chemicalindustries

ABSTRACT: In addition of predict in g future and changes in the market, understanding the exchange from different aspects can reduce investments risk and achieve greater efficiency. One of the most important factors in choosing the best investment is stock returns. On the other hand, one of the measuring criteria for success of a traitor activity is financial ratios. The aim of this study has been to investigate the relationship between liquidity and activity ratios and stock returns .The addressed community is pharmaceutical and chemical industries listed in Tehran Stock Exchange during the years2003 to2007.Regression analysis was used to test the relationship between variables. In addition, to analyze data three statistical tests of Kolmogorov - Smirnov, linear Regression and Pearson correlation were used using spss software. Results of research hypothecsis testing showed all the six independent variables(current ratio, acid test ratio, receivable accounts turnover ratio, inventory turnover ratio, fixed assets turnover ratio, total asset turnover ratio) have significant relationship with stock return of pharmaceutical and chemical companies listed on the Tehran Stock Exchange.