Macroeconomic Factors of Financial Performance: A Case Study of Cement Sector of Pakistan

This study examines the macroeconomic factors of the financial performance of cement sector firms in Pakistan. For this purpose, the data from 2011 to 2020 of cement sector firms listed on PSX is used in a study. The financial performance of cement sector firms is measured using ROA, ROI and ROE. For data analysis, panel unit root test, correlation matrix and pooled ordinary least square method are applied. The outcomes also point out that interest rate is negatively and significantly related to the ROE. Similarly, inflation rate is negatively associated with the ROA and ROE. Similarly, exchange rate is negatively and significantly related to the ROA and ROI. Lastly, GDP growth rate is positively and significantly associated to the ROA, ROE and ROI. Based on the results, it is inferred that macroeconomic factors are crucial to influence the financial performance of the cement sector in Pakistan. Therefore, these firms should take into consideration the macroeconomic factors to improve their financial performance.