Abstract:The article presents an approach to the corporation's capital structure management based on the criterion of maximizing the return on equity (ROE). The basis of this approach is the determination of the expediency of attracting borrowed resources from the point of view of balancing financial risk and profitability. The toolkit for optimizing the capital structure of the corporation is substantiated, taking into account the indicator of financial leverage, which ensures the most effective proportionality betwee… Show more
Purpose
The purpose of this paper is to investigate the impact of size, asset quality, asset management, financial risk, gross domestic product and inflation rate on the financial performance of companies listed on the Jakarta Islamic Index of 30 industrial firms.
Design/methodology/approach
Based on the selected criteria, this study analysed an unbalanced panel of data from 30 industrial companies on the Indonesian capital market that are members of the Jakarta Islamic index. Profitability is measured using the dependent variables return on assets (ROA), return on equity (ROE) and stock prices. The influence of explanatory variables of internal factors, namely, size, asset quality, asset management, financial risk, gross domestic product and inflation is investigated using pooled OLS, fixed and random effect estimation.
Findings
The empirical findings indicate that the scale of a company has a significant impact on its performance, asset quality, asset management and financial risk. GDP has a substantial impact on financial performance, particularly as measured by ROA and ROE. This study’s ramifications have substantial effects on a broad spectrum of stakeholders. The results of this study provide the general public and investors with a greater understanding of the factors that influence a company’s performance on the Jakarta Islamic Index 30.
Research limitations/implications
The implication of this research is that a deeper comprehension of the factors that influence the financial performance of companies within industrial sectors that follow Islamic finance principles can help design more effective strategies and policies.
Practical implications
This research has significant practical implications in a number of crucial areas. First, it provides a comprehensive comprehension of the company’s financial performance in the industrial sector in accordance with Islamic finance principles. Second, the research findings provide more precise guidance on how company size, asset quality and macroeconomic variables influence the performance of Indonesia's financial market.
Originality/value
The study’s authenticity and value hold considerable importance. This study introduces novel perspectives on the assessment of corporate financial performance within industrial sectors through the lens of Islamic finance principles. It offers valuable insights that have not yet been extensively investigated by scholars in the field.
Purpose
The purpose of this paper is to investigate the impact of size, asset quality, asset management, financial risk, gross domestic product and inflation rate on the financial performance of companies listed on the Jakarta Islamic Index of 30 industrial firms.
Design/methodology/approach
Based on the selected criteria, this study analysed an unbalanced panel of data from 30 industrial companies on the Indonesian capital market that are members of the Jakarta Islamic index. Profitability is measured using the dependent variables return on assets (ROA), return on equity (ROE) and stock prices. The influence of explanatory variables of internal factors, namely, size, asset quality, asset management, financial risk, gross domestic product and inflation is investigated using pooled OLS, fixed and random effect estimation.
Findings
The empirical findings indicate that the scale of a company has a significant impact on its performance, asset quality, asset management and financial risk. GDP has a substantial impact on financial performance, particularly as measured by ROA and ROE. This study’s ramifications have substantial effects on a broad spectrum of stakeholders. The results of this study provide the general public and investors with a greater understanding of the factors that influence a company’s performance on the Jakarta Islamic Index 30.
Research limitations/implications
The implication of this research is that a deeper comprehension of the factors that influence the financial performance of companies within industrial sectors that follow Islamic finance principles can help design more effective strategies and policies.
Practical implications
This research has significant practical implications in a number of crucial areas. First, it provides a comprehensive comprehension of the company’s financial performance in the industrial sector in accordance with Islamic finance principles. Second, the research findings provide more precise guidance on how company size, asset quality and macroeconomic variables influence the performance of Indonesia's financial market.
Originality/value
The study’s authenticity and value hold considerable importance. This study introduces novel perspectives on the assessment of corporate financial performance within industrial sectors through the lens of Islamic finance principles. It offers valuable insights that have not yet been extensively investigated by scholars in the field.
<abstract>
<p>Our main purpose of the article was to substantiate the methodical approach to assess the enterprise's financial security based on the use of a model set for determining its parameters depending on the characteristics of financing activities and the associated level of risk. The proposed approach created opportunities to determine the parameters of the enterprise's financial security on the scale "level – status – position – zone" in the process of current and strategic management of not only financial security, but also the success of the enterprise as a whole. Based on the financial statements of Ukrainian enterprises by type of economic activity, the key financial indicators calculated and the parameters of their financial security over the past 9 years were determined. The research confirmed the decisive impact on the enterprise's financial security, the features of financing their activities, and the associated risk level. The practical use of the proposed approach proved that it is a convenient, understandable and informative tool for determining the parameters of the enterprise's financial security by the major indicators: Financial stability, liquidity, profitability, and activity financing risk.</p>
</abstract>
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