The Effect of Efficiency and Liquidity on the Profitability of the Saudi Commercial Banks (Published)
This study aimed at finding the effect of efficiency and liquidity on the profitability of the Saudi Commercial Banks. The profitability as a dependent variable is measured by return on assets, return on equity, operating profit Ratio, net interest margin ratio and net interest income ratio. Meanwhile, the efficiency and liquidity as independent variable are measured by Cost to income, Loans to total assets, total customer deposits to total assets and Loans to deposits. The study sample included 12 banks for the period 2014 to 2020. A set of statistical tools and financial indicators were used to test the validity of hypotheses. The results indicated that first, second and fifth hypothesis were rejected and third and fourth were accepted. The study recommend that Saudi commercial banks should focus more on liquidity and follow appropriate policies to gain more profitability. Finally, more studies and research work are required in the same field.
Citation: Ahmad Mohammad Alamri and Ahmad Aref Almazari (2021) The Effect of Efficiency and Liquidity on the Profitability of the Saudi Commercial Banks, European Journal of Accounting, Auditing and Finance Research, Vol.9, No. 8, pp.1-13
Keywords: Assets, Deposits, Equity, Liquidity, Loans, Profitability
Capital Structure and Firm Performance Nexus in Nigeria: A Case Study of Aluminum Extrusion Company PLC (Published)
This study investigated the link between capital structure and firm performance in Nigeria using Aluminum Extrusion Company PLC (ALEX), a company listed under the Basic material sector of the Nigerian Stock Exchange as a case study. The study adopted return on capital employed as proxy for firm performance (response variable), while capital structure components such as debt to equity ratio, debt to capital employed ratio and equity to capital employed ratio were used as the explanatory variables. Secondary data were collected from the annual published financial reports of the company for the period 2009 to 2018. The study employ descriptive statistics and multiple regression technique based on the E- view 9.0 Software as the methods of data analysis. The results revealed that debt to equity ratio has significant positive effect on return on capital employed, debt to capital employed ratio has negative influence on return on capital employed and equity to capital employed ratio has no influence on return on capital employed. Overall, capital structure has no significant effect (at 5% level) on firm performance. Based on the findings, the study recommended among others that the company should finance her activities with retained earnings and use debt as the last option as this is in agreement with the perking Order theory; that the indirect effect of capital structure on firm performance be analyzed by future researchers and that the company managers are advised to be extremely conscious in the use of debt financing as an option in their capital mix up to the optimal limits, as debt to equity ratio provides positive effect though not significant on performance.
Keywords: Capital, Debt, Equity, Firm, Performance, Returns, Structure, employed
The Assessment of Financially Distress Projects: Major Signs, Sources and Restructuring (Published)
The significance of project finance cannot be overemphasized as there is a paradigm shift in financing capital intensive projects by both private and public entities using project finance schemes as opposed to traditional corporate finance across the world. Unfortunately, a number of such projects are engulfed into financial distress at some point in their life cycles. In order to address this issue, this paper examined the elements of project financial distress, its major signs, sources, and as well as suggesting ways to eliminate these undesirable consequences. The methodology used is the critical analysis of empirical literature. Findings of this study provide basis for addressing financial distress conditions by restructuring financially distress projects. The findings also indicate that restructuring can be looked at in four broad dimensions notably; financial, asset, operational, and managerial
Keywords: Debts, Equity, Financial Distress, Project Finance, Restructuring, Risk
Accounting for Price Level Changes: Prospects and Problems (Published)
Prices do not remain constant over a period of time. They tend to change due to various economic, social or political factors. Changes in the price levels cause two types of economic conditions, inflation and deflation. Inflation may be defined as a period of general increase in the prices of factors of production whereas deflation may fall in the general price level. These changes in the price levels lead to inaccurate presentation of financial statements which otherwise are prepared to present a true and fair view of the company’s financial health. This is so because the financial statements are prepared on historical costs on the assumption that the unit of account. Accounting for price level changes is a system of maintaining accounts in which all items in financial statements are recorded at current values. This system of accounting ascertains profit or loss and presents financial position of the business on the basis of current prices. Accounting for price level changes is also called inflation accounting.
Keywords: Deflation, Equity, Inflation, Price level changes, Prices
The Application of the Capital Asset Pricing Model (CAPM) In the Nigerian Chemicals and Paints Industrial Sector (Published)
This paper calculated the (historical) betas of listed stocks in the chemicals and paints sector of the Nigerian Stock Exchange over a 13-year period (2000-2012). The beta estimation of listed stocks showed that the beta content of the entire sector ranges between 1.04% and -0.13 or between 6.78 and -2.31% providing an average beta content of 0.37 or 1.50% of the total risk for the sector. The results indicate that the unsystematic risk content in chemicals/paints sector stocks constitutes the bulk of the sector’s risk profile and that most of the stocks’ betas had defensive attributes over the study period. The investment implication is that including an appropriate mix of chemical and paints stocks in the investors’ portfolios would, ceteris paribus, help investors to achieve a combination of investments that are not highly correlated with larger economic cycle as well as higher-risk equity securities that can potentially yield higher returns than the market.
Keywords: Alpha Risk, Beta Risk, Capital Asset Pricing Model, Equity, Market Risk, Nigerian Stock Exchange, Systematic Risk, Total Risk, Unsystematic Risk, Volatility Level, beta