The Relationship Between EBIT/Total Revenue and Annual Returns: A Study of Leading Technology Companies

Abstract

This study examines the relationship between Earnings Before Interest and Taxes (EBIT)/Total Revenue and annual returns for four leading technology companies: Amazon (AMZN), Alibaba (BABA), Google (GOOG), and Baidu (BIDU). Using data from Yahoo Finance from 2018 to 2022 and applying regression analysis, the study finds a significant positive relationship between EBIT/Total Revenue ratios and annual returns. This suggests that higher EBIT/Total Revenue ratios may be associated with better annual returns. However, limitations include a narrow sample size and time frame, which may affect the generalizability of the results. Future research should consider a broader sample and longer time periods.