Corporate Profitability : Some Evidences Of Malaysian Listed Firms

When United States and Japan compete head to head in the open market, the latter have a clear advantage in terms of cost of capital. The low cost of capital is obtained from debt financing. However, debt led to financial fragility. The influence of debt on profit leads a lot of researchers to do re...

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Main Author:	Tan, Guat Poi
Format:	Thesis
Language:	eng eng
Published:	1999
Subjects:	HG Finance
Online Access:	https://etd.uum.edu.my/746/1/TAN_GUAT_POI_-_Corporate_Profitability_-_Some_Evidences_Of_Malaysian_Listed_Firms.pdf https://etd.uum.edu.my/746/2/1.TAN_GUAT_POI_-_Corporate_Profitability_-_Some_Evidences_Of_Malaysian_Listed_Firms.pdf
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id	my-uum-etd.746
record_format	uketd_dc
institution	Universiti Utara Malaysia
collection	UUM ETD
language	eng eng
topic	HG Finance
spellingShingle	HG Finance Tan, Guat Poi Corporate Profitability : Some Evidences Of Malaysian Listed Firms
description	When United States and Japan compete head to head in the open market, the latter have a clear advantage in terms of cost of capital. The low cost of capital is obtained from debt financing. However, debt led to financial fragility. The influence of debt on profit leads a lot of researchers to do research on it. They consistently show that debt and profitability have negative relationship. The reason for the negative relationship is that as a firm increases its debt usage, the risk of not meeting debt payments leads to higher rates of interest, which will reduce the profit. The previous model only explains leverage and profitability. They failed to include liquidity and activity ratio as factors influencing profit. Therefore, in this study, we investigate the influence of leverage, liquidity and activity. We conclude that profitability is a function of leverage, liquidity and activity. We also proposed that 56-65% of leverage is the best optimal leverage. The mean, maximum, minimum and standard deviation of return on assets (ROT), debt ratio (DR), times interest earned (TIE), current ratio (CR), quick ratio (QR), inventory turnover (INVTO) average collection period (ACP), fixed assets turnover (FATO), total assets turnover (TATO) and earnings per share (EPS) are also determined in order to see the performance of industrial companies in Malaysia. This study shows that leverage in industrial companies in Malaysia has an upward trend, liquidity is moderate but the activity performance of the cost of capital is poor. The package used in this study is Statistical Package of Social Sciences and the methods used are multiple regression. Pearson correlation and descriptive statistics. The samples are collected from industrial companies listed on the KLSE main board. A total of 320 samples are collected ranking from year 1993 to 1998.
format	Thesis
qualification_name	masters
qualification_level	Master's degree
author	Tan, Guat Poi
author_facet	Tan, Guat Poi
author_sort	Tan, Guat Poi
title	Corporate Profitability : Some Evidences Of Malaysian Listed Firms
title_short	Corporate Profitability : Some Evidences Of Malaysian Listed Firms
title_full	Corporate Profitability : Some Evidences Of Malaysian Listed Firms
title_fullStr	Corporate Profitability : Some Evidences Of Malaysian Listed Firms
title_full_unstemmed	Corporate Profitability : Some Evidences Of Malaysian Listed Firms
title_sort	corporate profitability : some evidences of malaysian listed firms
granting_institution	Universiti Utara Malaysia
granting_department	Sekolah Siswazah
publishDate	1999
url	https://etd.uum.edu.my/746/1/TAN_GUAT_POI_-_Corporate_Profitability_-_Some_Evidences_Of_Malaysian_Listed_Firms.pdf https://etd.uum.edu.my/746/2/1.TAN_GUAT_POI_-_Corporate_Profitability_-_Some_Evidences_Of_Malaysian_Listed_Firms.pdf
_version_	1747826988273369088
spelling	my-uum-etd.7462013-07-24T12:08:49Z Corporate Profitability : Some Evidences Of Malaysian Listed Firms 1999-08-01 Tan, Guat Poi Sekolah Siswazah Graduate School HG Finance When United States and Japan compete head to head in the open market, the latter have a clear advantage in terms of cost of capital. The low cost of capital is obtained from debt financing. However, debt led to financial fragility. The influence of debt on profit leads a lot of researchers to do research on it. They consistently show that debt and profitability have negative relationship. The reason for the negative relationship is that as a firm increases its debt usage, the risk of not meeting debt payments leads to higher rates of interest, which will reduce the profit. The previous model only explains leverage and profitability. They failed to include liquidity and activity ratio as factors influencing profit. Therefore, in this study, we investigate the influence of leverage, liquidity and activity. We conclude that profitability is a function of leverage, liquidity and activity. We also proposed that 56-65% of leverage is the best optimal leverage. The mean, maximum, minimum and standard deviation of return on assets (ROT), debt ratio (DR), times interest earned (TIE), current ratio (CR), quick ratio (QR), inventory turnover (INVTO) average collection period (ACP), fixed assets turnover (FATO), total assets turnover (TATO) and earnings per share (EPS) are also determined in order to see the performance of industrial companies in Malaysia. This study shows that leverage in industrial companies in Malaysia has an upward trend, liquidity is moderate but the activity performance of the cost of capital is poor. The package used in this study is Statistical Package of Social Sciences and the methods used are multiple regression. Pearson correlation and descriptive statistics. The samples are collected from industrial companies listed on the KLSE main board. A total of 320 samples are collected ranking from year 1993 to 1998. 1999-08 Thesis https://etd.uum.edu.my/746/ https://etd.uum.edu.my/746/1/TAN_GUAT_POI_-_Corporate_Profitability_-_Some_Evidences_Of_Malaysian_Listed_Firms.pdf application/pdf eng validuser https://etd.uum.edu.my/746/2/1.TAN_GUAT_POI_-_Corporate_Profitability_-_Some_Evidences_Of_Malaysian_Listed_Firms.pdf application/pdf eng public masters masters Universiti Utara Malaysia Ahmad Farid b. Abdul Rahman. (1990). Relationship between profitability and cupital budgeting: The case of Malaysian Firms in the manufacturing sector. Ph.D. (Managerial Economics). Thesis submitted to the Graduate Faculty of Rensselaer Polytechnic Institute, Troy, New York. Alderson, Michael J. and Betker, Brian L. (1995). Liquidation costs and capital structure. Journal of Financial Economics, 39, 45-69. Ang, James S., Chua, Jess H. and Meconell, John J. (1982). The administrative costs of corporate bankruptcy: A note. 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Corporate Profitability : Some Evidences Of Malaysian Listed Firms

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