Firms employing additional debt finance often do so with the expectations that future profits will more than compensate for the fixed cost of borrowing. Similarly additional investment of equity capital indicates management confidence that the future profitability of the firm will be greater than the fixed operating cost. Therefore the mapping of financing, investing and operating decisions to current earnings provides a more rounded view of likely future earnings. Following the decomposition of return on equity into financing, investing and operating leverages components by Agburuga & Ibanichuka (2016), we explore the ability of these components of corporate profitability to predict future earnings. We found that future earnings (FTE) was negatively related to financing leverage component (FLC) and investing leverage component (ILC) and positively related to operating leverage component (OLC). This study thus provides evidence consistent with the trade-off theory. The negative relation of FLC and ILC and positive relation of OLC respectively to future earnings is analogous to and systematically explains the negative and positive relations of accrual and cash flow components of earnings to future earnings and stock prices contrary to the Bernard & Stober (1989) finding that it is not systematic.
Relationship of Cash Flow Ratios and Financial Performance of Listed Banks in Emerging Economies – Nigeria Example (Published)
The study examines the relationship between cash flow and performance in the Banking sector of Nigeria. The study involved a survey of four (4) Banks quoted in the Nigeria Stock Exchange. Data were obtained from the annual report and accounts of selected Banks. The data were subjected to statistical analysis using correlation technique. The result of the study revealed that operating cash flow has a significant and strong positive relation with performance in the Banking sector in Nigeria, it was also reified that investing cash flow and financing cash flow have negative and weak relationship. The study recommends that regulatory authorities such as CBN, SEC, CAC and NDIC should be securitizing their financial statement and also external auditors of the quoted Banks in the Banking sector to use cash flow ratio in evaluating performance which will help investors make good decisions
Challenges and Obstacles That Small And Medium Enterprises Face In Terms Of Financing in Palestine (Published)
The purpose of the study attempts to analyze the obstacles and challenges that face small and medium enterprises in Palestine. This study seeks to look at the importance of small and medium enterprises, and to identify the most important constraints faced by small entrepreneurs in obtaining the required funding in Palestine, and what are the most important impediments toward financing of small projects. The investigation helped in identifying the major challenges of financing small and medium business and what to do in order to overcome these obstacles. It was also found that small enterprises are one of the most important key elements in achieving economic development in all countries of the world where it accounts for the highest percentage among all kinds of economic projects of all sizes. A qualitative closed-ended survey was carried out for collecting data from managers and owners of 35 businesses in Palestine. The responses of 28 statements were collected in five different categories. The findings showed that the Obstacles facing the growth of small enterprises in Palestine by respondents was “Weakness of representative organizations that defend the interests of small businesses, as well as Lack of legal frameworks and incentives for small businesses
Impact of National Fadama 111 Development Project Financing On the Socio-Economic Growth of Ebonyi State in Nigeria. (Published)
One of the major problems confronting Nigeria today is how to improve the quality of life in the rural areas, reduce the level of poverty and contribute to economic growth through Fadama 111 Development Project. The aim of this study is to investigate the impact of National Fadama Development Project Financing on the socio-economic growth of Ebonyi State using contents analysis and descriptive survey. It was discovered that counterpart contribution by Ebonyi State government has significant effect on socio-economic development of Ebonyi State and that there is long run correlation between counterpart contribution by Local Government Areas of Ebonyi State and socio-economic development of the state. We concluded that introducing the principles of comparative advantage, by the provision of credit facilities to the comparative group in Ebonyi State, only for those businesses that earned them the highest income should be encouraged.