Earnings Before Interest And Tax Research Articles

EXPLORING INVESTOR'S DECISIONS IN ESTIMATING THE EFFECT OF EARNING PERSISTENCE, FINANCIAL LEVERAGE, FOREIGN OWNERSHIP ON COMPANY REPUTATION AND VALUE IN NIGERIA

This study evaluates the effect of exploring investors decisions in estimating the effect of earning persistence, financial leverage, foreign ownership on company reputation and value We used multiple regression models on secondary data obtained from the annual and accounts of sampled consumer firms listed in Nigeria Stock Exchange spanning for ten (10) year from 2012-2021. The findings revealed that earnings before interest and tax (EBIT) and market capitalization (MCAP) are positively correlated though not significant at P- value. On the other hand, it can be deduced that the sensitivity of market capitalization to the control variable asset tangibility (at) is statistically positive and insignificant at P-value = 0.502 also but that has a positive and significant effect on financial leverage. It was documented that there exist perfect relationships between asset tangibility, financial leverage and natural logarithm of total assets connoting presence of colinearity. It is easily adjusted using colinearity diagnostics given the non-existence of both lagged values and dummy variables. The implication of the finding revealed that earnings before interest and tax (EBIT) and market capitalization (MCAP) are positive and can be used in predicting the movement of predictors variables regarding regressand; financial leverage, earnings before interest and tax and foreign ownership of consumer firms in Nigeria. The study hereby recommends that: consumer firms should not rely on debt financing but as well lay hand on the other means of increasing its working capital, thus; internal finance, general reserve etc. Above all, there will be collaborate between the firm and foreign partnership to improve financial performance, they should also focus on increasing wealth of the firm ensuring that the firms investors have their return on investment as when due.. Finally, firm management should adjust its administrative expense in order to increase profit for the year to encourage prospective investors. KEY WORDS: Return on investment, earnings and growth, foreign investors and profitability

Determinants of Time for Publication Annual Reports: Empirical Evidence from Non-Financial Listed Companies in Vietnam

This article studied the factors affecting the time taken for annual report submission through an analysis of 654 non-financial listed companies on the Vietnamese stock market from 2016 to 2020. Data collected were processed by using fixed-effect models (FEM), random effect models (REM), adjusted REM, and general least square (GLS) to ensure the validity of research results. The main objective of this paper was to explore the effects of independent variables including retained earnings (RETA), earnings before interest and tax (EBITTA), liquidity (WCTA), capital structure (BVETD), bankruptcy risk (ZSCORE), size (SIZE), number of years in business (AGE), characteristics of financial reports (CONSO), and type of audit firm (AUDIT) on the number of days for publication annual reports (TIME). The results obtained from the adjusted-REM and GLS regression showed that retained earnings, firm age, and firm size have positive effects on time for disclosure annual reports, whereas earnings before interest and tax and audit firm type have negative effects. In addition, the results showed that working capital, capital structure, feature of consolidated reports, and bankruptcy risk have no significant effects on time to publish annual reports.

Analisis Pengaruh Laba dan Arus Kas terhadap Financial Distress pada Perusahaan Transportasi yang Terdaftar di Bursa Efek Indonesia Tahun 2012-2016

Abstract This study aims to investigate the effect of Earnings Before Interest and Tax (EBIT) and cash flow on financial distress in transport companies listed on the Indonesia Stock Exchange in 2012 to 2016. Transportation in Indonesia began to show significant development after the attention given by the government through 13 logistical policies in 2015. The sample used in this study was 14 companies with 210 research objects. The results found evidence that EBIT and Cash Flow significantly influence financial distress.

THE EFFECT OF ALTMAN Z – SCORE FINANCIAL RATIO ON STOCK PRICE (STUDY ON GO PUBLIC PLANTATION SUBSECTOR COMPANIES IN INDONESIA STOCK EXCHANGE)

This study aims to examine and analyze the effect of the ratio - financial ratios Altman Z-Score on stock prices (study at the plantation subsector company that went public on the stock exchanges of Indonesia). The research data is annual data from 2014 until 2018. The sampling method used was purposive sampling. Of the population of 16 companies in the plantation subsector, 15 companies met the criteria plantation sub-sector into the sample. The analytical method used in this study is panel data regression. The results showed Working Capital to Total Assets (WCTA), Retained Earnings to Total Assets (RETA), Earnings Before Interest and Tax (EBITTA) and Market Value Equity to Book Value of Total Liabilites (MVEBTL) together - the same (simultaneous) effect significant positive stock price

Corporate default risk modeling under distressed economic and financial conditions in a developing economy

We create stepwise logistic regression models to predict the probability of default for private nonfinancial firms under distressed financial and economic conditions in a developing economy. Our main aim is to identify and interpret the drivers of private firm probability of default. For applicability and efficacy purposes, we apply a unique real-world data set of Zimbabwean private firms. Our experimental results show that the ratios of earnings before interest and tax (EBIT) to total assets, bank debt to total assets, EBIT to total liabilities, accounts receivable to net sales and the ratio of current assets minus current liabilities to total assets, the age of the firm, the real gross domestic product growth rate and the inflation rate are all strong drivers of probability of default for Zimbabwean private firms. We conclude that accounting information is useful in differentiating between defaulted and non-defaulted private firms under downturn conditions in a developing economy. Moreover, we determine that the forecasting results of probability of default models are improved by incorporating macroeconomic variables.

CROSS BORDER ACQUISITION OF JLR: A BOON OR PAIN FOR TATA MOTORS

ABSTRACT The trend of mergers and acquisitions (M&A) has seen a surge during the past decades. Indian companies have also adopted the strategy of mergers and acquisitions for their expansion & growth. It facilitates the corporations in gaining competitive advantages and increase in their shareholder’s wealth. The study till date analysed both inbound and outbound deals and M&A’s positive or adverse impact on a company. Studies conducted in the past showed that the rate of unsuccessful mergers and acquisitions were more in number than the successful ones. This paper attempts to evaluate the effect of Earnings before Interest and Tax (EBIT) of Jaguar & Land Rover (JLR) on share prices of Tata Motors. Tata Motors is an Indian conglomerate automotive company of Tata Sons based in India and also the parent of JLR. Tata Motors has acquired JLR, a British multinational automotive company, in 2008 for $2.3bn. This study has taken price movement of a share of Tata Motors on NSE for the year 2008 to 2018 and correlated it with the corresponding years’ EBIT of JLR which significantly contributes to profits of Tata Motors in the form of dividends. Thirteen weeks price moving an average of Tata Motors on NSE is taken as one set of variable, and quarterly EBIT of JLR is taken on another. The study has also taken into consideration various macroeconomic factors that would have had an impact on the performance of JLR and in turn on the prices of Tata motors. This study found that the EBIT of JLR is positively correlated with the share price of Tata Motors. Keywords Acquisition, Earning Before Interest and Tax, Share Price, Correlation

Debt or equity? Optimal capital structure in Indonesia's construction sector companies listed in Indonesia stock exchange (IDX)

Government's plan of more focus on infrastructure is an opportunity for construction sector. With the increase of opportunities in the construction sector, companies in the construction sector will attempt to achieve an optimal capital structure in order to continue the company's operations and to develop their business. Optimal capital structure can be used to find out composition of debt and equity in order to maximise firm value. To see the composition of optimal debt, the simulation is done by using 0 until 90% debt composition. Earnings before interest and tax (EBIT) as simulation calculations basic obtained from each company's 2014 Annual Report. Optimal debt composition resulted from simulation are Acset 30%, Adhi 20%, Nusa 20%, Pembangunan 30%, Surya 50%, Total 30%, Waskita 20% and Wijaya 50%. On average, construction sector companies should have 30% composition of debt, but it depends on EBIT, interest coverage ratio and cost of debt.

Australian CEO Remuneration and Firm Financial Performance in Australia after the GFC

This paper develops a discussion looking at whether CEO Remuneration has an impact on Firm Performance after the Global Financial Crisis (GFC). This study entails Australian CEO’s and Firms and the data collected is from public listed corporations from 2010-2012. The developed models are constructed to test relationships between dependent and independent variables in line with research questions and hypotheses. The findings found that there are mixed findings between CEO Remuneration and Net Profit after Tax (NPAT), Earnings before Interest and Tax (EBIT) and market Capitalisation (MCAP). The paper will be of vital importance to other academics looking at this question, and to both public and private sector entities.

The Executive Efficiency Index: What is it? And Why is it Important?

This paper develops a discussion around the Executive “Efficiency Index” as to its nature and importance.This study entails US, UK and Australian CEO’s and Executive Director Remuneration and Profit data from public listed firms.The data collected is from public listed corporations from 2000-2012.Developed models are constructed to test relationships between dependent and independent variables in line with research questions and hypotheses.The findings found that there are mixed findings between CEO and Executive Director Remuneration and Net Profit after Tax (NPAT), Earnings before Interest and Tax (EBIT).The paper will be of vital importance to other academics looking at this question, and to both public and private sector entities.

Practice Prize Paper—Incorporating Emotions into Evaluation and Choice Models: Application to Kmart Australia

This paper addresses the repositioning of Kmart Australia in 2011. It shows how by calibrating emotional as well as cognitive reactions and estimating their impact on purchase intentions, Kmart was able to focus its communications, improving market share. We measure nine key emotions, ranging from surprise to anger. Including these emotions significantly improves our model for likelihood to choose a store. Measuring emotions enabled Kmart’s advertising agency to create a television commercial that tapped into the specific emotions that most strongly predict the likelihood to choose a store; that is, the model drove the development of the advertising creative. The resulting television commercial tested well and was effective when launched. At the individual level, cognitions and emotions changed dramatically. At the aggregate level, an econometric model showed that store visits were significantly enhanced. Kmart’s EBIT (earnings before interest and tax) increased by 30%, whereas Kmart’s main rival had almost no EBIT growth, despite vigorous attempts to counter Kmart’s campaign. One of our key contributions is to incorporate emotions into marketing science models of evaluation and purchase intentions. We also provide a new methodology to measure emotions. The approach enables marketing science to participate in the design of marketing stimuli, rather than just testing preexisting ones. Data, as supplemental material, are available at http://dx.doi.org/10.1287/mksc.2015.0954 .

Divergence between Operating Profit and EBIT

This paper is an attempt to understand the concepts of operating profit and EBIT (earnings before interest and tax) and to differentiate among them. Operating profit and EBIT is useful to understand the effect of profit arises due to business operations and the effect of interest element on profitability and efficiency of the business. Persistently in interpretation and analysis terms of operating profit and EBIT are used interchangeably. But these both concepts are different by reason of non-operating expenses and incomes other than interest and financial charges.

The Behavior of Operating Earnings in the Norwegian Salmon Farming Industry

It is well known that salmon aquaculture is a cyclical industry with substantial price volatility. However, limited attention has been given to the economic performance of the firms in the industry or their valuation. In this article we look closer at earnings before interest and tax (EBIT) in the Norwegian salmon farming industry. This is among the most common accounting measures of firm performance, and it is also used extensively in firm valuations. We find that the components of earnings have different time series behavior. Our empirical analysis shows that earnings from the Norwegian salmon farming industry can be characterized as a random walk. However, earnings/kg of fish sold is a more predictable variable and is mean reverting with clear cycles.

Evaluating the Stability of the Financial Ratios of Jordanian Industrial Companies

The purpose of the study was to identify if the financial ratios of Jordanian industrial companies remained stable across sector and over time. The study used six financial ratios from fifty-six companies across six sectors with financial information from 2010 to 2014. A two way multivariate analysis of variance was performed to identify the stability of the ratios across the sectors and over the time. The results of the study showed that the financial ratios which showed some difference across sector were EBITTA (Earnings before Interest and Tax), CAT (Current Assets Turnover) and CFTA (Cash Flow to Total Assets). There were no differences observed between the financial ratios over time. The interaction of Time and Sector revealed no significant interaction effects. This suggests that as a whole, the financial ratios remained stable over time and sectors over the sectors and period chosen for the study.

DRIVERS OF FIRMS’ DEBT RATIOS: EVIDENCE FROM TAIWANESE AND TURKISH FIRMS / ĮMONIŲ SKOLOS SANTYKIO NUSTATYMAS: TAIVANO IR TURKIJOS ĮMONIŲ PAVYZDŽIU

This study investigates the drivers of debt ratios of the firms listed on the stock markets of two different countries, namely Turkey, a developing country and Taiwan, a newly developed country. The factors impacting short-term, long-term, and total debts are selected as EBIT (Earnings before Interest and Tax), ROE (Return on Equity), sales, total assets, fixed assets-total assets ratio, and depreciation-total assets ratio. The findings indicate that there are differences between Turkish and Taiwanese firms in terms of the drivers’ impacts on the debt structures of the firms. The proposed regression models work better on the data collected from Taiwan as compared to the data from Turkey. Possible reasons are discussed in the final section. Santrauka Šis tyrimas apima dviejų skirtingų, tačiau stipriai besivystančių šalių, t. y. Taivano ir Turkijos rinkose veikiančių kompanijų skolos santykio nustatymą. Pagrindiniais veiksniais, turinčiais įtakos trumpalaikėms, ilgalaikėms ir bendrosioms skoloms, buvo pasirinktas pelnas prieš sumokant palūkanas ir mokesčius (EBIT), nuosavo kapitalo grąža (ROE), pardavimo, bendrojo turto, ilgalaikio turto ir bendrojo turto santykis bei bendrojo turto nusidėvėjimo santykis. Autorių gauti rezultatai rodo, kad vis dėlto yra skirtumų tarp Turkijos ir Taivano įmonių bei tų įmonių skolų struktūros. Straipsnio autoriai taikė regresijos metodus, kurie Taivano situaciją atspindėjo geriau nei Turkijos, o kodėl taip nutiko, autoriai argumentuoja paskutiniame straipsnio skyriuje.

Combined MCDM techniques for exploring company value based on Modigliani–Miller theorem

This study combines decision making trial and evaluation laboratory (DEMATEL), analytical network process (ANP), and VIKOR to discuss the influence relationship between and relative weights of the major factors influencing company value – cash flow, weighted average cost of capital (WACC), and tax shield and their sub-factors based on the Modigliani–Miller (MM) theorem. The purpose of this study is to offer a reference to investors and regulatory units on how to choose the most valuable company as well as utilize a more accurate financial econometrics model to support their decisions. The factors and sub-factors are identified through the research model proposed by this study and the 3 factors of MM are then expanded into a seven-factor model. Among the seven factors, a study on company value shows that scale of debt is the most important criterion compared to all other criteria, followed by cost of debt, and earnings before interest and tax (EBIT). Moreover, empirical findings demonstrate that among the leading companies of Taiwan, Japan and Korea’s panel sector, the investment value of Samsung Electronics is significantly higher than LG, AU Optronics (AUO), Innolux, and Sharp. Research results further indicate that decomposing the MM model into a more precise financial econometrics model can help investors make better stock investment decisions.

THE IMPACT OF SUPPLY CHAIN FIT ON FIRM PERFORMANCE.

The article quantifies the impact of the successful implementation of supply chain strategies on a firm's financial success. Supply chain fit is defined as the strategic consistencies between a product's demand aspects and its underlying supply chain design. Guidelines are discussed under which companies will be able to develop their own models for supply chain excellence and get rid of efficiencies caused by lack of supply chain fit. A firm's financial success is measured in terms of return on capital employed (ROCE), return on assets (ROA), sales growth, and earnings before interest and tax (EBIT) margin.

The impact of potential nitrous oxide mitigation strategies on the environmental and economic performance of dairy systems in four New Zealand catchments

The expansion of the New Zealand dairy industry has resulted in growing concern about the environmental impacts. As such, efforts are being made to design environmentally and economically sustainable management strategies. In this desktop study, the performance of two management strategies was assessed for dairy systems in four New Zealand catchments. Survey and monitoring information on farm management, farm production, and soils was used to estimate nitrous oxide (N2O) and total greenhouse gas (GHG, i.e. N2O, methane and carbon dioxide) emissions, nitrate leaching and profitability of farms under current management, and of farms using wintering pads and nitrification inhibitors. Under the wintering pad option, it was estimated that N2O emissions decreased by up to 8%, total GHG emissions increased by up to 10%, and nitrate leaching losses decreased by up to 44%. In terms of economic performance, wintering pads slightly decreased farm Earnings Before Interest and Tax (EBIT) on three of the four catchments. On the other hand, the use of a nitrification inhibitor has the potential to reduce N2O emissions, total GHG emissions and nitrate leaching losses from all catchment case study farms while increasing the EBIT. This study suggested that nitrification inhibitors can be a cost-effective mitigation strategy for reducing dairy farm N emissions to air and water. The analysis also illustrated the importance of assessing environmental mitigation strategies at a farm-systems level, including relevant off-farm activities.

The Impact of Not Amortizing Intangible Assets on Valuation Multiples

Intangible assets comprise goodwill and identifiable intangible assets with finite and indefinite lives. Current New Zealand GAAP amortizes intangible assets on a systematic basis over their useful lives, with the proviso that the amortization period for goodwill cannot exceed 20 years. International Financial Reporting Standards (IFRS) do not permit the periodic amortization of goodwill and identifiable intangible assets with indefinite lives. Instead, these intangibles are subject to a periodic impairment test with any impairment recognised in profit or loss. In the absence of an impairment loss, the IFRS rule would increase earnings before interest and tax (EBIT) and earnings (E), but this impact should not affect the value of the enterprise (EV) and the value of the firm’s equity (P). Hence, valuation heuristics for EV/EBIT (enterprise value to EBIT) and PE (price to earnings) multiples, which are commonly used for valuations and which have evolved under the amortization rule, need to be revised downward to adjust for the IFRS‐induced increase in EBIT and E. Our analysis of New Zealand companies with intangible assets indicates that the mean EV/EBIT and PE multiples with amortization of intangibles of 12.403 and 13.586, respectively, decrease to 10.971 and 12.346, respectively, without amortization of intangibles.

Long-term analysis of price, productivity, and profitability trends in New Zealand agriculture

Much has been written and spoken over the years about continually declining inflation adjusted commodity prices, the volatility of the New Zealand dollar, and the difficulties of competing against subsidized agricultural sectors. While NZ agriculture has enjoyed good levels of profitability in recent years these underlying forces still remain and will continue to impact farm profitability. Rising land prices and improved productivity of our competitors are likely to erode NZ agriculture's tr aditional position as a low cost producer in the future. The commonly cited responses to the forces outlined above are 1) adding value to commodities, and 2) increasing productivity. An earlier analysis showed that the NZ sheep and beef sector, in particular, was experiencing decreasing prices in real terms and farm productivity had remained largely unchanged for fifty years. In contrast to the data reviewed earlier, this paper shows that over the last fifteen years the NZ agricultural industry has been exhibiting just those responses required to combat the forces above. New Zealand lamb prices have increased in real terms since the late-1980s and in comparison with international prices. Beef and dairy prices have also fallen substantially less than the comparative international price, however wool and wheat prices have fallen more than the international price. In addition, there have been significant increases in farm pr oductivity, most notably lambing percentage, lamb carcass weights, and milksolids production/ cow. The result has been a 57% increase in dairy Earnings Before Inter est and Tax (EBIT) over the past 5 years, compared with the previous half decade (measured in real terms). Sheep farming has experienced a 79% increase in EBIT over the same period. The challenge and subject of significant debate which is outside the scope of this paper is how NZ agriculture is to remain at the forefront of global pastoral agriculture as a low cost, innovative, and profitable sector. Keywords: agricultural productivity, farm profitability, product prices, New Zealand agriculture.

A desktop evaluation of the environmental and economic performance of model dairy farming systems within four New Zealand catchments

The environmental and economic performances of low, medium and high input dairy farming systems were evaluated for model farms within catchments in Waikato, Taranaki Canterbury and Southland. These four catchments, predominantly under dairy landuse, are part of a long term systems study of farm productivity and catchment-specific environmental issues. Within each catchment, environmental and economic performance indicators were derived for model farms by using the farm systems modelling tool UDDER and the OVERSEER™ nutrient budgeting programme. Our analyses indicated that high input systems, currently defined as farms within the top quartile of farm inputs, either as imported feed or fertiliser nitrogen (N), were often the least profitable, as defined by Earnings Before Interest and Tax (EBIT). These high-input systems consistently had the greatest environmental emissions of N and greenhouse gases, and the greatest energy consumption, on a per hectare and a per kg milksolids basis. The most profitable farm input system depended on payout and the catchment under study. Evaluation of the whole-farm system using these modelling tools demonstrated the relatively large contribution that stock wintering made to N emissions from farms within the two South Island catchments. Where reductions in N losses are sought, it would seem prudent to initially target mitigations at this part of the farm system. Keywords: dairy farming, environmental emissions, farm systems modelling, OVERSEER™ nutrient budgets, UDDER farm systems tool