The impact of the banking sector development on the financial performance of the communication sector in sierra leone

4.6 Definition of Key Measurement Materials
The clear meaning of the variables used in this work needs to be establish in 
relation to the study, they are follows; 
 Return on Assets (ROA): is primarily an indicator of managerial 
efficiency, it indicates how capable management has been in converting 
assets into earnings. (Rose & Hudgins, 2007). It can be calculated by 
the formulae
ROA =
𝐍𝐞𝐭 𝐈𝐧𝐜𝐨𝐦𝐞
𝐓𝐨𝐭𝐚𝐥 𝐀𝐬𝐬𝐞𝐭𝐬
.
It can be interpreted as, a positive ratio indicates upward profit trend 
showing how management has effectively managed its available 
assets to produce a greater amount of returns and negative ratio the 
reverse, respectively. 
 Loans and Advances Volume (LAV): this represent the total actual 
loan balance granted by the banking industry at a particular period of 
time, whiles the advances are the short-term overdraft and some other 
financing facilities granted from time to time. This study will only take into 
cognisance balances as at the end of the year and loans amount utilised. 
 Interest Rate (IR): according to money and banking, interest rate is the 
cost of borrowing. This study will only incorporate the interest rate 
attached to the facilities granted at a particular time. Banking facilities 
move along with interest, this study would try to explore the impact of the 
interest rate on the loan granted and how it affect the earnings of the 
selected institutions and also determines its relationship with ROA. 
 Debt Ratio (DR): is a financial ratio that indicates the percentage of a 
company assets that are provided via debt (investopedia, n.d.). in order 
to meet the objectives of this study, debt ratio would be calculated as 
long-term plus short-term debt in relation to banking facilities be divided 

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by total assets (long-term + Short-term debt/ total Assets) or
𝐷𝑒𝑏𝑡 𝑅𝑎𝑡𝑖𝑜 =
𝐿𝑜𝑛𝑔−𝑡𝑒𝑟𝑚 𝐷𝑒𝑏𝑡+𝑆ℎ𝑜𝑟𝑡−𝑡𝑒𝑟𝑚 𝐷𝑒𝑏𝑡
𝑇𝑜𝑡𝑎𝑙 𝐴𝑠𝑠𝑒𝑡𝑠
.
This would help ascertain the percentage of 
the selected companies’ 
assets that are provided via borrowing facilities that came directly from 
the banking industry.