Testing Linear Relationships between Excess Rate of Return and Financial Ratios

In this article we review the relationship between exceed rate of return and some of the financial ratios in accepted companies in Tehran Stock Exchange. Therefore 43 company were selected and this relationship investigated in the following periods separately and in pool. March 2001 to March 2002 - March 2002 to March 2003 - March 2003 to March 2004 - March 2004 to March 2005. The results showed that in most of the cases the changes in return on assets ratio, profit margin ratio amp; earning to price ratio could explain the changes in exceed rate of return. Also the results show that among investigated financial ratios, the ratios which in them, income was a part of calculating, had meaningful relationship with exceed rate of return. This review showed that in periods which mentioned above, in investigated companies, income factors relative to balance sheet factors had more informational content