Total Assets Ratio Research Articles

The Impact of Capital Investments on Firm Financial Performance – Empirical Evidence from the Listed Food and Agriculture Companies in Vietnam

Capital investment is one of the most important financial decisions of a firm, which effects the business survival. This paper investigates the impact of capital investments on firm performance to provide an insight for future capital investment decisions of companies. The study uses unbalance panel data gathered from 62 companies which covered 688 observations of listed food and agriculture sector in Vietnam stock exchange during the period 2009 – 2020. To control for unobserved individual effects, the random effect estimator was employed. Profit margin (PM) is used as a proxy for firm performance, while independent variables are capital investment rate in both short-term and long-term effect, equity to total assets ratio, firm size and tangible to fixed assets ratio. The results indicate that capital investments have statistically significant positive impact on long-term performance of the analyzed enterprises. This outcome is in accordant with many previous studies. Especially in the context of Vietnam listed food and agriculture companies have high level of capital investment, a portion increase in capital investment rate will increase the company profit margin. Other variables also have statistically significant relationship with profit margin, in details, equity ratio and size have positive effect while tangible assets ratio has negative effect on firm performance. Therefore, the research suggest firm managers should choose the appropriate capital investment strategies in long-term perspective, within the consideration of equity ratio, economics of scale and tangible assets investment ratio to get the most efficient performance.

Investigating the Impact of Firm-specific and Macroeconomic Determinants of Operating Efficiency of Commercial Banks: Panel Evidence from Bangladesh

This paper aims to find out the significant firm-specific and macroeconomic determinants of operating efficiency through covering 360 observations having 30 commercial banks’ data from 2009 to 2020. Model specification test along with several diagnostic tests has been done and our investigation reveals that Net interest margin or net investment income ratio, loan loss provision to total loan, debt to total assets and total loan to earning assets are significantly related with operating efficiency ratio (OER) bringing the changes in operating efficiency. In the second model, return on equity, net interest margin or net investment income ratio, equity capital to total assets, loan loss provision to total loan, bank size, total loan to earning assets and total loan to total deposit significantly affect the operating efficiency of commercial banks being measured with cost efficiency ratio (CER). In the subsequent model, net interest margin or net investment income ratio, total loan to earning assets, debt to total assets ratio, and total loan to total deposit have been evidenced to affect the operating efficiency significantly being measured with operating expense to earning assets ratio (OEEAR).

Does genetic diversity on corporate boards lead to improved environmental performance?

We study the effects of boards’ genetic diversity on corporate environmental performance. Using a multidimensional information set for 3690 US firms during the period from 2005 to 2019, and three different measures of genetic diversity, we find that, pursuant to the diversity theory, which posits that diversity improves the quality of management decisions and business ethics, genetic diversity leads to improved environmental performance. We also find that genetic diversity improves carbon and governance performance, and ESG disclosure. Particularly, a one percentage point increase in boards’ genetic diversity will increase the carbon performance, measured by the inverse of the carbon emissions to total assets ratio, and environmental performance by 3.54% and 5.57%, respectively. Our results remain robust to different model specifications, while also controlling for endogeneity. In terms of policy implications, results suggest that the key to tackling climate challenges is to promote boards’ genetic diversity.

THE EFFECT OF CAPITAL STUCTURE ON THE COMPANY FINANCIAL PERFORMANCE IN THE COAL MINING SECTOR

The aim of this study was to analyze the capital structure on financial performance. Capital structure is measured by the leverage ratio (solvability) through the total debt to total assets ratio (DAR), total debt to total equity ratio (DER), and long-term debt to equity ratio (LDER) proxies, while financial performance is measured by the profitability ratio using the Return on Asset (ROA) proxy. The study population is a coal mining company listed on the Indonesia Stock Exchange in 2014-2019. The purposive sampling method was chosen as a sampling method with certain criteria. The final sample size based on predetermined criteria was 96 (16 companies with an observation period of 6 years). Multiple linear regression was used to test the hypothesis. The results showed that DAR and LDER had a negative effect on ROA, while DER did not affect ROA.

Corporate Capital Structure Practices and Shareholder’s Wealth of Shariah Compliant Firms of Pakistan

Main objective of the research is to investigate the impact of corporate capital structure practice on the shareholders wealth of sharia-compliant companies that are quoted in the Pakistan Stock Exchange. For the purpose of determining the impact, the company’s shareholders wealth has been used as the dependent variable, represented by return on assets. The capital structure is used as the independent variable, and its proxies are the debt-to-equity ratio for long-term financing and the current asset to current liability ratio for short-term financing, respectively. Size, tangibility and growth were taken as control variables and determined by the sales-to-assets ratio, fixed asset to total asset ratio, and percentage change in sales respectively. Panel data of 22 shariah complaint firms according to screening criteria established by Al Meezan investment limited for the period of June 30,2008 to June 30, 2020, has been taken from listed firms in Pakistan stock exchange. All descriptive analysis, diagnostics tests and regression were applied for comprehensive data analysis. This study reveals that, for sharia-compliant businesses, sales growth is more important than tangibility or size when it comes to firm shareholders wealth. Due to the type of research that has been conducted, firms which are not shariah compliant, excluded from the panel and focus has only been given on the shariah compliant firms specifically listed in Pakistan stock exchange. The findings of this study may be applicable only shariah compliant firms as per criteria established by Pakistani shariah board. This study is explicitly completed about the capital constructure of shariah consistent firms since shariah agreeable firms are confined by interest bearing debt up to a specific cutoff, so it is consuming contemporary corporate finance issue to investigate explicitly the effect of corporate capital structure of shariah agreeable companies’ shareholders wealth in Pakistani capital market.

Analisis Solvabilitas dan Profitabilitas dalam Mengukur Kinerja Keuangan PT Pelabuhan Tanjung Priok Periode 2017-2021

The purpose of this study is to analyze the Solvency seen by Debt to Total Asset Ratio, and Debt To Total Equity as well as Profitability seen from Profit Margin, Return On Asset, and Return On Equity and to find out the extent to which the company's assets are financed with debt. Measuring Financial Performance and analyzing it with Solvency and Profitability based on cashmere opinions.
 This type of research uses qualitative research based on assumptions, data collection, and research design is flexible or subject to change. The data sources in this study are Primary and documentation and data collection techniques by means of observation, documents, and triangulation.
 The data analysis procedure is based on the opinion of Kasmir to measure and analyze the financial statements of Tanjung Priok Port. To check the validity of the data researchers use Triangulation, Discussion, and Membercheck. The results of the study in measuring the Financial Performance of PT Tanjung Priok Port are seen from Solvency and Profitability, and based on the opinion of Kasmir for the 2014-2018 period which states that "the company will be said to be less good if the average value of calculating financial performance for five years is below the standard measuring value."
 The conclusion of this study is that financial performance can be said to be good, if solvency in the company decreases and profitability in the company increases.

Discovering Capital Structure Determinants for SAARC Energy Firms

Energy scarcity is the core drain for the South Asian economies. However, there is a lack of studies in relation to the capital structure determinants in the context of South Asian Association for Regional Cooperation (SAARC). Thus, this study is an attempt to explore the capital structure determinants of energy sector firms which are operating in the four large economies of the SAARC region that are Pakistan, India, Bangladesh and Sri Lanka. In this context, a total of 34 energy sector firms’ Panel Data is entailed over the period of 2007-2020. The six key capital structure determinants, namely asset tangibility, current ratio, return on equity, non-debt tax shield, annual gross domestic product are examined in relation to debt to total asset ratio. Deploying Panel Data Static models and Dynamic model via Generalized Method of Moments (GMM), the outcomes reveal that asset tangibility and current ratio are the most prominent determinants among all others. The significant role of profitability and tangibility through different estimators directly infers the relevance of Dynamic Trade-Off theory. The findings provide new ways for policy makers to construct parallel strategies which not only help out in overcoming the energy scarcity issues but also enhance regional level integration.

AN EMPIRICAL ANALYSIS OF FINANCIAL HEALTH OF SHRIRAM TRANSPORT FINANCE COMPANY LTD (STFC)

Shriram Transport finance company Limited (STFC) is a non-banking finance company (NBFC) having approximately five to six percent share of market in new trade financing and about twenty five percent market share of pre-owned trade financing. The company customer base is more than 18 lacs. It has exposed to continuous increasing competition from banking sector and other NBFCs. Revenue of the company is placed at 6th rank among its top ten companies. In our study timeframe, it has also faced challenge of COVID-19. All these factors have affected performance of the company therefore it becomes pertinent to look into the financial performance and soundness of the company by using an analysis tool in order to determine its healthy zone. This paper is quantitative and empirical in nature which is based on secondary data collected from various records, websites, reports and financial books of the company. Altman ‘Z’ score has been used to judge the financial position of the STFC. Altman Z score has been used to analyse the financial health and soundness of the company. This score has been found out by including ratio of working capital to total assets, retained earnings to total assets, EBIT to total assets ratio, market value of equity to total liabilities ratio and net operating revenue to total assets ratios. Therefore, this analysis suggests five accounting ratios in order to prepare a solvency index and uses as an effective tool to evaluate corporate performance to predict bankruptcy. Multiple discriminant analysis (MDA) has applied for the period 2011-12 to 2021-22 to determine the financial health of the company. At last, various measures have been suggested to improve the financial position of the company in future. KEYWORDS: STFC, Finance, COVID-19, Financial Health, NBFC, Z Score

Variabel - Variabel yang Berpengaruh Terhadap Harga Pasar Saham Pada Perusahaan Kelapa Sawit yang Terdaftar di Bursa Efek Indonesia Tahun 2015 – 2020

The number of capital market investors in Indonesia is very minimal, as of July 2022 there were 8.88 million accounts consisting of Stock investors, with 42% of them being stock investors and 60.29% dominated by millennials. Fundamental factors are represented by liquidity ratios, solvency ratios, activity ratios, and performance ratios. The study was conducted using a quantitative approach, with a population of 24 oil palm plantation companies listed on the Indonesia Stock Exchange. The research sample consisted of 5 oil palm plantation companies selected using the purposive sampling method. The statistical method used in this study is multiple regression analysis. The results of this study indicate 1) the liquidity ratio expressed by Working Capital to Total Asset Ratio and the Quick Asset Ratio has no significant effect on stock market prices, 2) the solvency ratio expressed by the Debt to Asset Ratio has a significant effect on stock market prices, 3) the activity ratio which is expressed by Total Assets Turn Over has no significant effect on the Stock Market Price, and 4) Performance Ratios expressed by Earning Per Share, have a significant effect on Market price

Determinante profitabilnosti mikropoljoprivrednih preduzeća iz Republike Srbije

The paper analyzes the determinants of profitability of microagricultural enterprises that operated in the Republic of Serbia, the analysis was carried out for the period from 2010 to 2019. Using panel regression analysis, the influence of various microeconomic and macroeconomic determinants on profitability, measured by the rate of return on assets, was examined. The following indicators were observed as microeconomic determinants of profitability: liquidity, financial leverage, indebtedness, asset structure indicator, total business asset turnover ratio, fixed asset turnover ratio, current asset turnover ratio, inventory turnover ratio, trade receivables turnover ratio and sales rate. Indicators of the growth rate of the gross domestic product and inflation were observed as macroeconomic determinants of profitability. Based on the results of the panel regression analysis, it was determined that the turnover ratio of total business assets, the turnover ratio of current assets and the growth rate of the gross domestic product have a positive and statistically significant influence on the profitability of the observed companies. Indebtedness, an indicator of asset structure and the turnover ratio of fixed assets have a negative and statistically significant impact on the profitability of the observed companies. It is expected that the obtained results will be useful to all interested parties in agribusiness, primarily in the context of the analysis of factors that have been determined to have a negative impact on the profitability of the observed companies.

Inequality and Asset Fire Sales

It is widely acknowledged that fire sales were a critical factor in inducing and exacerbating the financial crises of 2007--2008. The leverage of financial intermediaries, which is defined as the ratio of total assets to capital, is a key factor in causing fire sales. Why do financial intermediaries expand their balance sheets despite subsequently having to sell their assets at discounted prices? To examine this question, we incorporate financial intermediaries into a three-period incomplete market economy model, in which households face countercyclical and uninsured idiosyncratic income shocks. We demonstrate that countercyclical income inequality and market incompleteness result in leveraged investment and subsequent asset fire sales by financial intermediaries in equilibrium. The first contribution of this paper is that we demonstrate that the mechanism between asset prices and leverages could successfully solve the famed asset-pricing puzzles. The second contribution is that we analyze the impact of financial regulation on the welfare of ex ante homogeneous households.

Ownership Structure and Investment Decisions of Listed Consumer Goods Firms in Nigeria

The choice of investment is a critical decision every corporate organization is confronted with. This is because the outcome has the capacity to affect every aspect of an entity as a going concern. Ownership structure has been advanced as a control mechanism that determines the economic trajectory of a firm through its influence on the investment decisions made by firms. The study therefore empirically analyzed ownership structure dynamics on investment decisions of listed consumer goods firms in Nigeria. Data was garnered from the year end reports and accounts of the selected firms, validated by the relevant regulatory bodies. Inferential analysis via multiple regression was used as the mechanism for data examination. The findings revealed that ownership structure has significant effect on noncurrent assets to total assets ratio. (Adj R2 = 0.105; Wald Chi2 (4,173) = 8.79 P =0.03 < 0.05). The study consequently prescribes that Government, regulators and policy makers should synergize to strengthen the governance frameworks of firms which will translate to efficient monitoring and oversight as well as an appreciation in long term investment intensity. Keywords: Consumer goods firms, corporate organizations, investment decisions, noncurrent assets to total assets ratio, ownership structure

The Role of Financial Ratios in Predicting Return on Equity of Commercial Banks

The explanatory power of the bank specific financial ratios on return on equity of the joint venture commercial banks operated in Nepal has been examined by using the database of 15 years from 2005/06 to 2019/20. The descriptive and correlational research design have been adopted for the study. The explanatory financial ratios used for the study includes capital adequacy, non-performing loan to total loan, net interest to total assets ratio, deposit to total assets ratio, and investment to total assets ratio. Statistical tools such as descriptive statistics, correlation analysis, and the regression analysis have been used as the major tools of data analysis. The results revealed that capital adequacy ratio, net interest to assets ratio and investment to assets ratio have the significant positive impact on commercial banks profitability. In contrast, non-preforming loan to total loan has the significant negative impact on banks' profitability whereas, deposit to total assets ratio has no significant impact on commercial banks' profitability.

Loan and Advance Management of Nepal Bank Limited and Rastriya Banijya Bank

The main objective of this study was to assess and compare loan and advance management of Nepal Bank Limited and Rastriya Banijya Bank. The study used descriptive and analytical research design. Two banks out of total 27 commercial banks in Nepal were selected based on judgmental sampling. Quantitative data are collected from secondary sources of annual audited report. The collected data were classified, coded and analyzed with the help of statistical tools like percentage, mean, standard deviation, coefficient of correlation, and coefficient of determination using MS-Word, MS-Excel, and Statistical Package for Social Science. Both the banks utilized most of the deposits in the forms of loan and advance. NBL has provided more amount for loan loss provision in comparison with the RBB. Non-performing loan to total loan and advance ratio showed that NBL (2.25%) has good management than the RBB (4.03%). Unlike this, the mean ratio of loan and advance to total assets ratio of NBL (55.7%) is lower than the RBB (61.48%) proved that RBB mobilized fund properly. Lower standard deviation and coefficient of variation of RBB have been indicated that the bank has more uniformity than the NBL except interest income to loan and advance ratio. The study showed that there is significant relationship of loan and advance with total deposit, loan loss provision, nonperforming loan and total assets of both banks except the non-performing loan and loan and advance of RBB.

Analysis of Financial Ratios in the Drinking Water Company (PAM) Tirta Mangkaluku, Palopo City

This study aims to determine and analyze financial ratios (liquidity, solvency and profitability ratios) in the Drinking Water Company (PAM) Tirta Mangkaluku) Palopo City. The type of data used in this study is secondary data, where the data relates to the financial reports obtained from the Drinking Water Company (PAM) Tirta Mangkaluku Jalan Pongsimpin, Murante Village, Mungkajang District, Palopo City for the period 2014 – 2016. Based on the results of the study, it was found that Current The ratio cannot increase the added value of PAM Tirta Mangkaluku, Palopo City, but because the Current ratio (CR) is more than 100%. Thus, the company can pay off its current debt when billed. The Quick Ratio (QR) cannot increase the added value of PAM Tirta Mangkaluku Palopo and the results of current assets minus inventory are higher than current liabilities so that the company is able to pay off its current debts when billed. The debt to total asset ratio (DR) can increase the added value of PAM Tirta Mangkaluku, Palopo City, because the total assets are more than the total debt, so the company can pay off its total debt. The Debt to Equity Ratio (DER) can increase the added value of PAM Tirta Mangkaluku, Palopo City, because the total assets are more than the total debt, so the company can pay off its total debt. Economic Profitability (RE) cannot increase the added value of PAM Tirta Mangkaluku, Palopo City. Based on the calculation results of Own Capital Profitability (RMS) for the last 3 years from 2014 to 2016 there has been a fluctuating increase, the result is that Own Capital Profitability can increase added value to PAM Tirta Mangkaluku Palopo City.

The Influence of Bank Liquidity on Lending Behaviour of Deposit Money Banks (DMBs) in Nigeria (2006 - 2020)

The relevance of DMBs and their lending activities in Nigeria necessitates concern about the liquidity condition of these banks. This is particularly pertinent, given the spate of recurring unpalatable incidences in the Nigerian banking sub-sector even after the 2005 consolidation. The objective of the study was to examine the influence of bank liquidity on lending behaviour of DMBs in Nigeria. Twelve (12) listed DMBs were selected using the convenience sampling technique. The ex post facto research design was adopted and secondary data drawn from the sampled DMBs from 2006 to 2020 were used for analysis. The data were analyzed using descriptive statistics and regression analysis. The results revealed that bank liquidity significantly influences lending behaviour of DMBs. However, the loan to total assets ratio was found to exert the highest relative influence on lending behaviour of DMBs. It was therefore recommended that DMBs should prioritize the maintenance of a dynamic loan to total assets ratio. Also the Central Bank of Nigeria and other regulatory bodies should be more proactive in ensuring DMBs’ liquidity and sustainability.

ANALISIS RASIO KEUANGAN UNTUK MENILAI KINERJA KEUANGAN PADA PT. H.M SAMPOERNA Tbk

This research of this study are based on the liquidity ratio proxied by Current Ratio and Quick Ratio, the condition of the company's financial performance is not good. Profitability ratio proxied by Net Profit Margin, Return on Assets, and Return on Equity, the company's financial performance is good. Solvency ratio proxied by Debt to Total Assets Ratio and Debt to Total Equity Ratio, the company's financial performance is good

Pengaruh DAR Dan ROA Terhadap Kinerja Keuangan Perusahaan Industri Sub Sektor Otomotif Dan Komponen

The purpose of this study is to determine whether there is an effect of debt to total asset ratio (DAR) and return on assets (ROA) on the financial performance of the automotive and component sub-sector industrial companies listed on the Indonesia Stock Exchange (IDX). The population in this study are 12 industrial companies in the automotiveand component sub-sector listed on the Indonesia Stock Exchange (IDX) with a total sample of 36. The sampling method used is saturated sampling technique where the sample used is the entire population in this study. The independent variables used in this study are DAR and ROA, while the dependent variable is financial performance. This study uses annual data from 2019 to 2021 with the data analysis method used in this study is quantitative descriptive, while the analytical model used in this study is multiple linear regression analysis. Testing this hypothesis using the coefficient of determination (R2), partial test (t test) and simultaneous test (F test). The results of this study indicate that simultaneously DAR and ROA have a positive and significant effect on financial performance, in addition partially DAR and ROA have a significant and positive effect on financial performance.

Capital ratios and banking crises in the European Union

We assess if capital ratios reduced the occurrence of banking crises in the European Union from 1998 to 2017. We use a Probit model and estimate the effect of two measures: the bank capital to total assets ratio and the bank regulatory capital to Risk Weighted Assets (RWA). We found that both measures affect negatively the probability of crisis. This result is robust to the exclusion of outliers, to the inclusion of various control variables for banking, financial and macroeconomic risks. Finally, we show that while the bank regulatory capital to RWA has always a negative effect on the probability of crisis, the bank capital to total assets ratio is only significant above a threshold, estimated between 10 ​% and 12 ​%.

An Empirical Analysis of the Correlation Between Derivatives Usage and Firm Specific Factors in Zimbabwe

The research examined 45 firms’ derivative usage in relation to their financial gearing, size, liquidity, profitability, and solvency ratio. A logit regression model was run from the year 2019 to the year 2021. The logit model revealed at 99% level of confidence that, a firm’s derivative usage is significantly and positively related to its liquidity ratio as measured by cash and cash equivalents to total assets ratio. The study also revealed that usage of share options by firms listed on the Zimbabwe Stock Exchange had no significant relationship with financial gearing, firm size, profitability, and solvency ratio at 1% level of significance. Hence the study encourages firms to significantly improve on their liquidity positions prior to the issuance of employees’ stock options, in-order to provide robust safety nets for vesting. Keywords: Derivative usage, liquidity ratio, logit regression model, share options DOI: 10.7176/RJFA/13-24-08 Publication date: December 31 st 2022