Analysing the Impact of Financial Ratios on a Company’s Financial Performance

Abstract

This study was conducted to analyze the relationship between several chosen financial ratios and the financial performance of companies. Chosen financial indicators were Current Ratio, EPS, Firm size, Leverage Ratio and BV/MV Ratio. Financial performance of the companies was assessed through growth of the net profit margin. Ten companies which were registered in Colombo Stock Exchange which were categorized as diversified holdings were chosen as the sample. Financial data from 2013-2018 were considered for this study. A panel data analysis was used to determine the relationships between the independent variables and the dependent variables with given consideration to time series analysis and cross sectional analysis. According to the results of the study only current ratio, leverage and the firm size had significant relationships with the financial performance of the company. Current ratio and firm size positively impacted the company’s profitability, where as leverage impacted negatively. This study aims to enable informed decision making of the financial actors of an organization to enhance the profitability of the given organization.

The Relationship among Cash Flow, Firms’ Size and Financial Performance of Food and Beverage Companies Listed on the Nigerian Stock Exchange (NSE)

“…Based on the findings, the study concludes that cash flow index had a positive and significant impact on return on assets as a measure of financial performance; also cash flow ratio (as a cash flow index) has a positive and significant impact on return on equity (as a measure of financial performance). Findings from the studies imply positive impacts of cash flow on financial performance of listed food and beverage companies in Nigeria; the findings in this study are consistent with Kariyawasam (2019) who also found positive impact of cash flow on financial performance. Babalola and Abiola (2013) established that high ratio is a sign of unsystematic operation of funds, but this study's findings disagree with studies of Panigrahi (2013), Saleem and Rehman (2011), Bolek and Wili'nski (2012) who found negative relationship between cash flow and financial performance.…”

the Effect of Der and Risk on Stock Return on Consumer Goods Companies

“…To predict stock returns, investors use various factors as parameters, one of which is to assess the company's financial performance in making their choice of stock. To measure the company's financial performance used financial ratio analysis (Kariyawasam, 2019). The company's financial ratios can be seen from the aspect of liquidity, leverage or solvency, probability, and market assessment of the company.…”

Gayrimenkul yatırım ortaklıklarının kârlılık oranlarının borsa performansına etkisi

“…Kârlılık oranlarındaki değişimlere ilişkin bilgilerin ulaşılabilir olmasından dolayı, yatırımcılar elde ettikleri veriler ile hisse senedi kazanımları üzerinde tahminlerde bulunmaktadırlar. Kârlılık göstergelerinde meydana gelen değişim haberleri karşısında piyasa tepkisi sonucu borsa endeksi etkilenerek kârlılık unsurlarıyla borsa göstergesi arasında bir ilgi ortaya çıkmaktadır (Kariyawasam, 2019(Kariyawasam, : 1899. Gayrimenkul piyasasının önemli özelliklerinden birisi de makroekonomideki değişikliklere karşı duyarlı olmasıdır (Hepşen vd., 2017: 194).…”