Literature article Reviewing the Effect of Liquidity and Profitability in the context of financial management, a scientific study titled Financial Performance and Financial Distress tries to provide a research hypothesis on the interaction between factors. This literature review was written using the library research approach, including information from online academic databases like Google Scholar, Mendeley, and others. The outcomes of this article's literature review are:1) Liquidity affects Financial Performance; 2) Profitability has an effect on Financial Performance; 3) Liquidity affects Financial Distress; 4) Profitability has an effect on Financial Distress; and 5) Financial Performance Affects Financial Distress; In addition to these 2 external factors that influence the endogenous variables Financial Performance and Financial Distress there are still other additional elements, like as Leverage, Solvency and Activity variables. Show liquidity ratio, efficiency ratio, profitability ratio and valuation ratio. Different measures like return on investment, return on equity, return on assets, earning per share, dividend per share, and asset utilization ratio are used to assess the profitability of the companies. He concluded his study stating that the solvency position of both companies is not sound and credit creation capacity is good in both the companies in aggregate. Bala Ramaswmy, Darrylong and Mattew C.H. Yeung (2005) has found empirical evidence that firm size and the firm ownership are important determinants of financial performance in the Malaysian palm oil sector-findings lend support to industry analysts who have highlighted that profitability is higher in privately owned firms. Woo Gon Kim, Baker Ayoun (2005) the study attempts to investigate the technique applied in this industry. Hospitability – related industry segments may comprise hotels, restaurants, airlines, and other amusement and recreational services. The objective of the study is to provide information to a variety of entities that might be interested in comparing major financial characteristics of companies on its different segments. The researcher used financial ratios, time series and Multivariate analysis of variances’ test as statist ical tools. The study concludes that increased volatility of hospitability industry due to unpredictable external environment for the past four to five years. More volatile trends are depicted for the other three segments over the time period of this study. Myung Ko and Carlos Dorantes (2006) investigates the impact of information security breaches on firm performance. To evaluate the financial impact of security breaches related to confidential information, the “matched sample comparison group” method is u sed. The researcher used ratios and two cost related ratios and percentage of change in sales and operating income to see if these measures are better indicators for identifying differences in performance considering the context of this study. Profit ratios have been the most commonly used as performance measures Jose M. Moneva, Juana M. Rivera-Lirio, (2007) Maria J. Munoz-Torres analyses the mission statements and the sustainability reports, of a sample of 52 Spanish listed firms. Some traditional financial and economic- indicators are used to analyze the company’s financial performance. Results show a not very high level of the stakeholder approach in Spanish companies a high level of publication and quality of sustainability reports and, finally, a positive and not significant relationship between these variables and a positive financial performance. Neumann and Roberts (2008) argued that financial measures are given more value over non-financial measures and ROI is the single performance measures to which managers give more weightage. Efendioglu. M (2010) explores the impact of strategic planning on financial performance of major industrial enterprises of Turkey. This paper is one of the few studies to examine the strategic planning process in a sample of firms from a transitional economy. It can be considered a longitudinal study because it examines a set of institutions to identify changes in their performance overtime, as they incorporate the use of strategic tools in a dynamic competitive environment. The research sample was drawn from the Turkish chamber of industry database which listed the top 500 manufacturing firms in 2006. The findings of this study provide a contribution to our understanding of the nature and practice of strategic planning in Turkish companies and possibilities of correlations between their efforts and performance. Mahdi Salehi, Mehrdad Alipour and Morteza Ramazani (2010), the objective of the article is to establish the extent to which just-in- time may effect to Iranian company’s f inancial performance. The researcher used regression analysis as statistical tool. Eventually the researcher concludes that the application of the JIT system in Iran increases the financial and non financial performance of the companies. Because of the weakness in performing the JIT, they cannot benefit from it. The researchers strongly suggest that the barriers of performing the JIT system must be identified and removed as soon as possible, so that the Iranian companies increase their financial performances. Verdi Ali (2010) identifies whether this company has a strong financial fundamentals and whether investment in the company will be of a long term nature. Its financial statements had been analyzed during 5 years period (2004-2008). Financial analysis has been measured by various ratios. The study concludes that current ratio has declined in the last 4 years. However, it is still well above the industry level, and it maintains a good level of liquidity. Hassan Mobeen Alam, Ali Raza and Muhammad Akram (2011) examine financial performance of leasing companies since 2008 to 2010. Ratio analysis technique has been used to evaluate financial performance of leasing companies. All data has been retrieved from securities & Exchange commission of Pakistan, Asian financial service association, Leasing Association of Pakistan, State Bank of Pakistan, and leasing company’s websites. Nine companies are selected for analysis out of fifteen and this study covers three year period ((2008,2009 and 2010) . The researcher used ratios as statistical tools. This study concludes that in 2010 the financial ratios are showing the positive change but there is a decline in financial performance of leasing companies in 2009 when compared to 2008. AmalenduBhunia, Sri SomnathMukhuti and Sri Gautam Roy (2011) aims to identify the financial strengths and weaknesses of the Indian public sector Pharmaceutical enterprises by properly establishing relationships between the items of the balance sheet and profit and loss account. The study has been undertaken for the period of twelve years from 1997-98 to 2008-09 and the necessary data have been obtained from CMIE database and public enterprises survey. In order to analyze the financial performance in terms of liquidity, solvency, profitability and financial efficiency, various accounting ratios have been used. Various statistical measures have been used (ie) Mean, Standard deviation, co-efficient of variation, linear multiple regression analysis and test of hypothesis t-test. From the study it can be concluded that the liquidity position was strong in case be concluded that the liquidity position was strong in case of KAPL and it was so poor in case of RDPL thereby reflecting the ability of the companies to pay short-term obligations on duedates. The study will help investors to identify the nature of Indian Pharmaceutical industry and will also What is the financial statement analysis review?Financial statement analysis evaluates a company's performance or value through a company's balance sheet, income statement, or statement of cash flows. By using a number of techniques, such as horizontal, vertical, or ratio analysis, investors may develop a more nuanced picture of a company's financial profile. What are the research methods for financial statement analysis?There are five commonplace approaches to financial statement analysis: horizontal analysis, vertical analysis, ratio analysis, trend analysis and cost-volume profit analysis. Each technique allows the building of a more detailed and nuanced financial profile. How do you review financial statements?There are generally six steps to developing an effective analysis of financial statements.. Identify the industry economic characteristics. ... . Identify company strategies. ... . Assess the quality of the firm's financial statements. ... . Analyze current profitability and risk. ... . Prepare forecasted financial statements. ... . Value the firm.. What is literature review in ratio analysis?Review of Literature refers to the collection of the results of the various researches relating to the present study. It takes into consideration the research of the previous researchers which are related to the present research in any way. |
