Correlation of R&D Investment and Financial Ratios of Government-Invested Enterprises

Abstract

This study analyzes research and development (R&D) in government-invested enterprises and analyzes whether investment in R&D has a correlation with the financial ratios of these enterprises. First, investment and interest in R&D among government-invested enterprises is shown to be very weak; however, after the foreign currency crisis, government-invested enterprises increased their investment in R&D to a degree. Second, a positive correlation was found between R&D investment and CR and QR from the current ratio; NITA and OITA from the profitability ratio; and PC variables from the productivity ratio. The R&D investment in government-invested enterprises has a close correlation with monetary assets and total capital from the financial ratio. Third, quick assets that can be converted to cash must be established systematically for the financial operation plan to link with the long-term profit realization of government-invested enterprises, and the strategic plan to maximize the added value from the total capital has to be considered.