A Financial Analysis of Domestic Firms With Highest Returns to Capital During the Worldwide Pandemic

Abstract

This study analyzes the financial profile and risk-performance characteristics for the group of firms reporting the highest returns to total capital in the Value Line database during the worldwide pandemic. It compares the firms with a group selected randomly from the same industries to investigate if the firms reporting high returns to capital in such unusual economic environment have a unique risk-performance profile. This study tests if the group with the highest returns has a unique financial profile, and can the findings be validated without bias. If the answer is “yes,” then it would imply the financial profile may be used as a tool to predict if a particular company will maintain extraordinary performance in periods with similar market disturbances. As this study uses a new tool to analyze the financial characteristics of companies, it is a significant addition to the growing body of knowledge. Moreover, the tool used can also be applied by financial researchers, investors, and investment advisors/counselors in determining firm’s inherent values in such a unique environment.