The Study of Relationship between Performance of Maxis Berhad and Internal & External Factors

Abstract

The purpose of this study is to investigate the relationship between the financial performance and the capital structure of the company. The performance of the company will be measured by analysing the trend of various financial ratios obtained from the company’s annual report from 2014 to 2018. The relationship between the profitability and the internal and external factors are also analysed with the company’s performance. The performance of Maxis Berhad is represented by the return on asset over 5 years’ period. The capital structure is measured by collecting data from the balance sheet of the annual reports. As for the financial performance, the data is collected from the income statements and balance sheets. Ratio analysis is then measured from the obtained data. As for the internal factors, these are the relevant variables to be measured; current ratio, quick ratio, average-collection period, debt-to-income, operational ratio, and operating margin. The additional measurement is the corporate index score, asset size, net profit margin, GDP growth rate, inflation, interest rate, and exchange rate. The data was carefully analysed by applying regression and correlation. The Model Summary table also shows that debt-to-income has the most reliable variable as the R Square is equals to 79.9%. There is a strong relationship between ROA and debt-to-income with -0.894 and sig. 0.020. There are three variables that significant to the ROA, namely, debt-to-income, operating margin and, the interest rate as the sig. value is below 0.1.

Keywords: Financial performance, liquidity risk, credit risk, operational risk, market risk

JEL Classification: G32, E40, L25, P44