Assessment of the impact of financial indicators based on the multiple linear regression model

. One of the criteria for effective working capital management is the financial cycle of a commercial organization, but indicators such as liquidity and return on assets also play a great role in financial planning. Despite the fact that these indicators play an important role in the financial management of the company, the nature of their relationships is ambiguous. Based on theoretical research, we can say that there is an inverse relationship between the financial cycle and return on assets. In the presented work, based on the model of multiple linear regression, an assessment of this statement about feedback was carried out, using the example of the leading telecommunications companies of the Russian Federation. The study mathematically proved that there is a weak relationship between the financial cycle and the return on assets of telecommunications companies.


Introduction
Currently, MTS PJSC, Rostelecom, Megafon PJSC and Vimpelcom PJSC are the main players in the telecommunications services market in the Russian Federation.
PJSC Rostelecom positions itself as Russia's largest integrated provider of digital services and solutions, which is present in all market segments and covers millions of households, public and private organizations [1].
MegaFon is a national Russian operator of digital capabilities, occupying a leading position in the telecommunications market in Russia and the world.[2].
PJSC VimpelCom (Beeline brand) is part of the VEON group of companies, which in turn is a global communications provider, with the aspiration to be the first in personal Internet services for more than 212 million customers that the company currently serves, and for many others in the coming years.The headquarters of VEON Ltd. are located in the Netherlands and in Amsterdam.VEON Ltd. shares are listed on the NASDAQ and Euronext Amsterdam exchanges.[3] The analysis of the financial statements of the company's data for 2020 and 2021 revealed that the same balance sheet structure is characteristic of telecommunications industry organizations.This fact is confirmed by the fact that the companies "MTS" [4], "Megafon" [2], "Rostelecom" [1] and "Vimpelcom" [3] most of the total assets are non-current assets of the enterprise.The liabilities of telecommunications companies are mostly represented by long-term liabilities.
Indicators such as revenue and net profit of telecommunications companies were also analyzed, the results of which are shown in Figure 1. Figure 1 shows that the activity of companies in 2021 was more efficient compared to 2020, as evidenced by the growth of revenue and net profit in all companies.Rostelecom PJSC is the leader in terms of revenue in 2021, and Megafon PJSC is the leader in terms of net profit.
Analyzing the structure of the company's liabilities, it was revealed that Rostelecom, Megafon and Vimpelcom, as well as MTS, do not attract short-term loans and borrowings, and accounts payable are balances on long-term loans and borrowings.
Next, let's look at the dynamics of the indicators characterizing the business activity of companies in the telecommunications industry in Russia.First, let's analyze the indicators of MTS PJSC.The results of the analysis are presented in Table 1.The results of Table 1 allow us to conclude that the turnover of assets has an uneven cyclical dynamics.Variable dynamics is also observed with respect to the periods of inventory turnover, accounts payable and receivables.With regard to the operating cycle from 2015 to 2017, there was a downward trend, but in 2018 this indicator increased to 70 days, but from the following year it began to gradually decrease and in 2021 it amounted to 61 days.The financial cycle for seven years had a negative value and exactly the same dynamics as the operating cycle, which is logical.
The current liquidity ratio has tended to decline for seven years, which suggests that since 2015 the company's ability to pay off its current liabilities with current assets has been declining.
The profitability of current assets shows how much profit a company receives from one ruble invested in current assets.The highest value of this indicator falls on 2016 and amounts to 53.25%, since this year the company experienced a reduction in current assets and an increase in profits.However, the following year, this indicator began to decline and in 2018 reached its lowest value -2.91%, due to the growth of current assets and a decrease in the company's net profit.
The greatest value of return on assets falls on 2017, which indicates that this year was the most effective activity of the company, which led to an increase in profitability.Despite this, in 2018, on the contrary, the return on assets reached its minimum value -0.86 due to a decrease in net profit as a result of the liquidation of part of the business, which led to a loss from discontinued operations in the amount of 59050 million rubles.
Next, let's look at the business activity indicators of PJSC Megafon, which are shown in Table 2.The data in Table 2 show that the turnover of assets increased until 2016, but since 2017 the situation has changed in a negative direction.In 2021 by 1 rub.assets account for 0.45 rubles.the company's revenue.The current trend is explained by the fact that the company's assets are growing at a faster pace compared to the organization's revenue.
The inventory turnover period has remained approximately at the same level for seven years.The turnover periods of accounts receivable and accounts payable are variable and often change, as well as the operating cycle.The financial cycle also has a negative value and uneven dynamics.The largest value of the negative financial cycle falls on 2015, and the smallest on 2021 and is 89 days.
The current liquidity ratio increased until 2019 and reached a value of 1.01.This means that in the event of unforeseen situations, the company can always finance its current activities at the expense of current assets.However, since 2020, this ratio has begun to decline due to the growth of accounts payable and a decrease in current assets.
The profitability of current assets does not have a homogeneous dynamics.The lowest value was in 2017, and the highest value of the return on current assets was in 2021 -54.06%.
There is also no uniform dynamics in terms of return on assets.The highest value is for 2015 -8.35, and the lowest for 2017 -0.95.
Table 3 shows the dynamics of indicators characterizing the business activity of PJSC Rostelecom.Based on the data presented in table 25, it can be concluded that the turnover of assets in the period from 2015 to 2021 was approximately at the same level.The inventory turnover period also had no serious fluctuations.Its lowest value is in 2015 -9 days, and the highest for 2021 -17 days.The sharp changes did not affect the other indicators of business activity.PJSC Rostelecom is also characterized by a negative financial cycle, as in the previously reviewed companies.
Table 4 shows the dynamics of indicators characterizing the business activity of PJSC Vimpelcom.The results of Table 4 show that for seven years there have been no major changes in the indicators characterizing the business activity of Vimpelcom, except for a sharp increase in the profitability of current assets to 25.86% as a result of a decrease in current assets and an increase in net profit.
It should be noted that PJSC Vimpelcom has a long period of turnover of accounts payable, which led to a large negative value of the financial cycle.This situation is explained by the large amount of accounts payable, which arose as a result of the company's inclusion in it not only trade accounts payable, but also lease obligations, advances issued, etc.
Based on all of the above, it can be concluded that a short period of inventory turnover and a negative financial cycle are characteristic of telecommunications companies.This is due to the specifics of the companies' activities.The negative financial cycle of MTS, Rostelecom, Megafon and Vimpelcom suggests that they effectively manage accounts payable and receivables and have no need for short-term financing of their current activities, as they have at their disposal the funds of counterparties.

Hypothesis
The financial cycle and return on assets are two interrelated concepts in business.The financial cycle describes the period of time required for a company to convert its investments into cash.The return on assets reflects the efficiency of using the company's assets to generate profit.A high return on assets means that the company uses its assets efficiently, which leads to an increase in profits.
The relationship between the duration of the financial cycle, which characterizes the effectiveness of working capital management, and the profitability of companies has been studied by many researchers for several years.
So, in his work Jose M., Lancaster C. and Stevens J. [5].we studied a large sample of companies from seven different industries over a 20-year period.After analyzing the impact of the financial cycle on the return on assets, they came to the conclusion that there is an inverse relationship between the indicators.A number of other studies have also revealed the presence of a sufficiently strong statistically significant inverse linear interdependence between the financial cycle and the profitability of companies.[5].
In the study [6], it was proved that in order to increase liquidity (expressed by the current liquidity ratio), companies need to increase their financial cycle, whereas in order to increase profitability, the financial cycle needs to be brought closer to zero.It was also found that there is an inverse relationship between the financial cycle and the indicators of return on assets.Thus, in order to increase profitability, companies should reduce the size of their financial cycle to an optimal zero value, taking into account their current level of liquidity; that is, the level of liquidity measured by the current liquidity indicator serves as a limit on the size of the financial cycle.
A number of scientists also study the relationship between the firm's liquidity and its profitability, and get contradictory results.For example, in study [7], after analyzing firms traded on the stock exchange, it was concluded that there is a feedback relationship between the indicator of liquidity and profitability of firms and that there is a direct relationship between the size of the firm and its profitability.A similar study was also conducted in the work of Elgelli [8].After analyzing data on a sample of 29 traded companies in Saudi Arabia, the author concluded that there is a statistically significant feedback between the levels of liquidity and profitability of these firms.At the same time, some studies prove the existence of a statistically significant direct relationship between the liquidity indicator (current liquidity ratio) and the profitability of companies.[9,10].
The analysis of the size of the financial cycle of an organization is further complicated by the fact that this issue has industry and time specifics.The paper [11] shows the presence of significant industry specifics concerning the size of investments in current assets, and hence the size of the financial cycle of firms.In this regard, it can be assumed that in different industries, the impact of the size of the financial cycle on the indicators that set the goals of working capital management will be different.
Successful financial cycle management can help to increase the profitability of the company's assets.A company that accelerates its financial cycle can access cash faster, which can increase its ability to invest and generate profits.A fast financial cycle can also mean more efficient inventory management and faster production cycle.This, in turn, can increase the return on assets.
Let's check this statement based on the actual data of the four (main) telecommunications companies of the Russian Federation.

Research methodology
The methodological basis of the research was the principles of dialectical logic, the unity of logical and historical approaches to the study of financial and economic phenomena.The paper uses a systematic approach based on comparative, computational, factorial and econometric analysis, as well as theoretical methods of cognition: abstraction, generalization, analysis.
In methodological terms, the work is based on the methods of functional and structural analysis.The nature of the problem brought to the center of the study required the authors to ensure a systematic approach and continuity in the study of the range of issues related to it.
Simulation results and their discussion.When analyzing the impact of the financial cycle on the return on assets of telecommunications companies, an econometric model was used -a model of multiple linear regression.Its specificity lies in the fact that within the framework of this model, the dependence of one variable on several explanatory factors is studied [12].
Multiple linear regression has the following form: where y is a productive attribute; x1,x2,… xn -factor signs; a, b1,b2, … bn -estimates of the set parameters.When constructing this model, the profitability of the company's assets was used as y, x1 -the period of inventory turnover, x2 -the period of turnover of accounts receivable, x3 -the period of turnover of accounts payable, x4 -the current liquidity ratio.The choice of parameters was made based on the correlation coefficients, which show the degree of relationship between the two indicators and is in the range from -1 to 1.The results of calculations of correlation coefficients are presented in Table 5.It should be noted that in Table 5, the financial cycle of telecommunications companies acts as x4, and the current liquidity ratio is x5.The data presented in Table 5 allow us to draw the following conclusions: -there is a direct moderate relationship between the return on assets and the inventory turnover period, as well as the financial cycle, which suggests that with an increase in X1 (Ttur.3)increases and Y (ROA); -there is a moderate inverse relationship between the return on assets and the turnover period of accounts payable and receivables, i.e. with an increase in X2 (Tob.DZ) and X3 (Tob.KZ), Y (ROA) decreases; -there is a very weak feedback between the return on assets and the current liquidity ratio.
-there is a strong feedback between the period of turnover of accounts payable and the financial cycle, which suggests that with an increase in X3 (Tob.KZ), there is a decrease in X4 (FC).
In general, it can be concluded that most of the correlation coefficients showed a moderate relationship between the given parameters and with changes in one indicator, the other will change slightly.
Due to the fact that the financial cycle includes a period of inventory turnover, the period of turnover of accounts payable and receivables is impractical to use when constructing a multiple linear regression model, because it will give a double repeating result.
Table 6 presents an array of experimental data used in the calculations of the correlation coefficient and the linear regression model.
Based on this formula, the effective feature Y (ROA) was calculated.The results are presented in Table 7.
In order to determine the correctness of the constructed model, it is necessary to pay attention to Figure 2.

Fig. 2. Graphical method of multiple linear regression model
Figure 2 shows that the calculated Y (ROAcal) well describes the initial value of Y (ROA), since their dynamics are similar.From this it follows that the constructed multiple linear regression is correct and it can be used to predict the calculated value of (Y (ROAcal.)).
However, despite the correctness of the construction of the linear regression model, it should be noted that the coefficient of determination is small.This coefficient characterizes the proportion of variation of the dependent variable due to regression.The closer the coefficient of determination is to one, the better the regression describes the relationship between the dependent and explanatory variables.Based on this, we can conclude that the return on assets is only 40% dependent on the selected parameters x1, x2, x3, and x4.

Conclusions
Summing up, we can conclude that there is a weak relationship between the financial cycle and the return on assets of telecommunications companies.The absence of a strong relationship between the financial cycle and return on assets is influenced by the industry affiliation of companies.Telecommunications companies are primarily companies providing services that are characterized by a small share of stocks, a negative financial cycle, strong financial dependence and a small level of return on assets.
The small return on assets of telecommunications companies is explained by the smooth dynamics of net profit, which in turn changes due to a small increase in revenue and an increase in expenses.
An increase in the profitability of the company's assets, as a rule, shows an increase in the company's income, an increase in the number of sales, and a reduction in the company's costs and expenses.

Fig. 1 .
Fig. 1.Dynamics of revenue and net profit of telecommunications companies.

Table 1 .
Indicators characterizing the business activity of MTS PJSC, million rubles.

Table 2 .
Indicators characterizing the business activity of PJSC Megafon, million rubles.

Table 3 .
Indicators characterizing the business activity of PJSC Rostelecom, million rubles.

Table 4 .
Indicators characterizing the business activity of PJSC Vimpelcom, million rubles.

Table 5 .
Correlation coefficients of the specified parameters

Table 6 .
Data array for multiple linear regression model The results of the multiple linear regression model are presented in Table7.

Table 7 .
Tabular form of the linear regression model