Measuring firm performance using financial ratios: A decision tree approach

Delen, Dursun; Kuzey, Cemil; Uyar, Ali

doi:10.1016/j.eswa.2013.01.012

Cited by 313 publications

(211 citation statements)

References 24 publications

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“…This means the lower the performance of the company, the higher the possibility of the firm facing financial distress and this is consistent with the studies by Delen et al (2013) and Zeli (2014). They found that poor company performance might increase insolvency and bankruptcy risk among American and Italian firms.…”

Section: Resultssupporting

confidence: 80%

Monitoring mechanisms and financial distress of public listed companies in Malaysia

Kazemian

Shauri

Sanusi³

et al. 2017

Journal of International Studies

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Abstract. This study examines the relationships between financial distress and financial ratio (liquidity, leverage, profitability, firm's performance, and dividend) among public listed companies, using the Altman Z-Score to determine the financial distress levels among public listed companies in Malaysia. Five-year data has been collected (2010 to 2014) from the annual financial statements and from Data Stream of public listed companies in Malaysia. The findings indicate significant relationships between liquidity, leverage, profitability, firm's performance, and dividend with the financial distress levels among the companies in question. This study also examines the interaction effects of financial ratios and the year after implementation of the Malaysian Code on Soheil Kazemian, Noor Shauri, Zuraidah Sanusi, Amrizah Kamaluddin, Shuhaida Shuhdan Monitoring mechanisms and financial distress of public listed companies in Malaysia 93Corporate Governance (MCCG) in 2012 on financial distress levels. The results suggest that only liquidity and firm's performance have stronger effects on financial distress levels in two years after MCCG implementation. This indicates that after the implementation of the Code, liquidity and firms' performance ratios had strong and significant effect on financial distress levels. Overall, this study could help investors, creditors as well as external regulators in monitoring companies from being classified as financially distressed companies.

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Section: Resultssupporting

confidence: 80%

Monitoring mechanisms and financial distress of public listed companies in Malaysia

Kazemian

Shauri

Sanusi³

et al. 2017

Journal of International Studies

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“…According to Delen, Kuzey, and Uyar (2013), the evaluation of performance of a firm with the use of financial ratios is a traditional activity. They further observed that it is a tool that is used by creditors of the business, investors and other stakeholders.…”

Section: Financial Ratios As Measurers Of Performancementioning

confidence: 99%

An Analysis of the Financial Performance of Selected Savings and Credit Co-Operative Societies in Botswana

Sathyamoorthi

Mbekomize

Radikoko

et al. 2016

IJEF

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The co-operative sector plays an important role in a country's socio-economic development. This paper evaluated the financial performance of 9 selected Savings and Credit Co-operative Societies (SACCOSs) in Botswana by analysing audited financial statements of a five-year period from 2008 to 2012. The analytical techniques used include descriptive statistics of financial aggregates and ratios, correlation, regression and common size analyses. The financial aggregates analysed included all items that impact income generation as well as items that represent the financial position of the selected societies. The findings underscored that the selected SACCOSs achieved good financial results and were in strong financial position. The results also indicated a significant relationship between Net Profit ratio and Capital Employed Ratio to inform that the Net Profit Ratio was the most important explainer of Return on Capital Employed. The 5 year common size analysis also revealed a growth in income and in the financial status of the selected societies. The capital structure of these societies was characterised by substantial share of internal funds. Conclusively, maintaining an optimal balance between the interest on loans and interest on members' savings, and investing extra cash in diversified portfolio to reduce the risk levels would make the SACCOSs grow and function more productively and profitably. They would also then succeed in attracting more members and thereby significantly contribute towards poverty reduction and economic diversification drives in the country.

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“…Beaver (1966) argue that financial ratios are generally used as inputs to predict a number of business related situations i.e., risk, financial distress, future cash flows, and credit ratings, and, among others. Delen, Kuzey, and Uyar (2013) indicate that the most significant variables in forecasting future returns is net profit margin ratio and earnings before interest and tax to equity ratio. Katchova and Enlow (2013) evaluate Du Pont ratios to compare return on equity components among agri-businesses and all companies.…”

Section: Introductionmentioning

confidence: 99%