Tag Archives: Solvency

Determinants of Survival of Listed Deposit Money Banks in Nigeria (Published)

In the business world, stakeholders are subject to several risks on investment including losing their venture. The existence of a healthy corporate structure is vital to the pursuit of the going concern objective of firms. This study investigates determinants of listed Deposit Money Banks’ (DMBs) survival in Nigeria. The sixteen listed DMBs in Nigeria as at December 2017 were used as the population and fifteen were sampled by applying a judgemental sampling technique. The study adopted descriptive and ex-post facto research design. The Emerging Market score (EM score) model was applied in the prediction of going concern status of sampled DMBs. The data used were obtained from the annual reports and accounts of the DMBs for 2007 to 2017 accounting periods. The data were analysed using Robust GLS Regression model. The study found that there is a positive and significant impact of liquidity, leverage, profitability, solvency and asset management on DMBs’ going concern (GC). This implies that, any increase in these determinants would lead to increase in GC of DMBs. With the adjusted r2 of 0.98 and F-value significance at 0.000 from the model used in the study, the study concludes that the independent variables in the EM score model are relevant in determining the GC of DMBs. It is highly recommended that DMBs should enhance their survival status (EM score of 5.48) by improving on their liquidity, profitability, solvency, leverage and asset management ratios to solidify their GC status.

Keywords: Asset Management, EMscore, Leverage, Liquidity, Profitability, Share Price, Solvency

Sector-wise Effect of Solvency on Profitability: Evidence from Jordanian Context (Review Completed - Accepted)

This study is conducted to investigate the effect of solvency on profitability among Jordanian Industrial sectors. As far as this study is concerned solvency which expressed by debt ratio (DEBT), and equity ratio (EQUITY), and the profitability which expressed by variables including earnings before interest and tax (EBIT), net profit margin (NPM), return on asset (ROA), and return on equity (ROE), and. For the analysis the multiple regressions cover a period 2008-2011, used to examine the effect of solvency on profitability among sectors. The study found that table the Mining and Extraction sector has the highest earnings before interest and tax (EBIT) while the lowest the Glass and Ceramic Industries. The Mining and Extraction sector has the highest Net Profit Margin (NPM), return on asset (ROA); return on equity (ROE) while the lowest the Glass and Ceramic Industries. Also table the Electrical Industries sector has the highest debit ratio (DEBT) while the lowest the Glass and Ceramic Industries. But The Glass and Ceramic Industries have the highest equity ratio (EQUITY) and the lowest equity ratio (EQUITY) for the Electrical Industries sector.

The study revealed that solvency has a significant relationship with earnings before interest and tax (EBIT), net profit margin (NPM), return on asset (ROA), and return on equity (ROE), because the test was at level 5%.

 

Keywords: Amman Stock Exchange (ASE), Debt Ratio, Earning before Interest and Tax, Equity Ratio, Net Profit Margin, Profitability, Return on Asset, Return on Equity, Solvency