effect of the liquidity, leverage and company size on company of

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E F F E C T O F T H E LIQUIDITY, L E V E R A G E AND C O M P A N Y S I Z E ON C O M P A N Y O F P R O F I T A B I L I T Y T O W A R D S F O O D AND B E V E R A G E S E C T O R IN M A L A Y S I A

MOHD HASHIM BIN J E M A N (2016668838)

B A C H E L O R O F B U S I N E S S A D M I N I S T R A T I O N W I T H H O N O U R S ( F I N A N C E )

F A C U L T Y O F B U S I N E S S M A N A G E M E N T

U N I V E R S I T Y T E C H N O L O G Y MARA

S A B A H

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A B S T R A C T

The purpose of the study was to establish the relationship between liquidity, leverage and company size on profitability of companies listed at the Bursa Malaysia towards the food and beverage sector. Specifically the study sought to establish the effect of liquidity, leverage and company size on profitability of companies listed Bursa Malaysia. This study was carried out on all the 30 listed companies between 2013 until 2017 in the sector of food and beverage in Malaysia. The leverage w a s measured using debt equity ratio, liquidity is current ratio, and while for company size is total asset where for this 3 variable is measure by independent variable.

Profitability was a dependent variable which measure by return on assets. T h e variables were tested using stata se analysis. Descriptive statistics were computed for the listed companies and the main characteristics of the study variables. T h e findings revealed that the relationship between leverage and profitability was positively significant relationship. There was a insignificant relationship between liquidity and profitability while the relation between company size and profitability also show the insignificant relationship. The study not only contributes to understanding the link between liquidity, leverage, company size and profitability of the firm but at the same time confirms the findings of previous studies that have found a significant link between liquidity, leverage, company size and profitability.

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Acknowledgements

Bismillahirrohanirrohim, Alhamdulillahirobbilalamin I can finally finish this research paper. This research paper would not have been completed without the help of Allah S W T . First of all, I would like to give thanks to Allah S W T through His infinite grace and mercy to make it possible for me to complete this research paper. I would like to express my deepest gratitude to my supervisor, Mdm. Anastasiah Harbi for her patience, guidance, motivation and assistance in this research paper. For all it's worth, this experience would eternally be attached in my memory.

I owe a lot to my family, especially my parents Jeman hj Bulah and Elin Rampun for their support in every aspect for the whole period of the study. Special thanks to my sister and brother, Nurul Haniyah binti J e m a n and Mohd Hanafi bin Jeman for the moral support and encouragement. I pray that we all will remain blessed.

Lastly, I would also like to give special thanks to my friend which is Norzannah, Mohd Iskandar and Khairul Anwar for their never ending encouragement and many other friends for being helped me in this project.

Thank you very much and May Allah gives His blessing for all of us.

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T A B L E OF CONTENT

C O N T E N T P A G E

C H A P T E R 1 :

1.0 INTRODUCTION 6

1.1: R E S E A R C H B A C K G R O U N D 6

1.2: P R O B L E M S T A T E M E N T 7-8

1.3 : R E S E A R C H Q U E S T I O N 8

1.4: R E S E A R C H O B J E C T I V E S 8-9

1.5: S I G N I F I C A N C E O F S T U D Y 9-10

1.6: LIMITATION O F S T U D Y 10

1.7 DEFINITION O F T E R M S 11-12

1.8: S U M M A R Y O F C H A P T E R 1 12

C H A P T E R 2 :

2.0: INTRODUCTION 13

2.1: T H E O R Y A S S O C I A T E D T O T H I S S T U D Y 13-15

2.3 Findings related in the study 15-19

2.4: C O N C E P T U A L F R A M E W O R K 20

C H A P T E R 3 :

3.1: S C O P E O F S T U D Y 22

3.2 : Empirical model 22-23

3.3 : DATA C O L L E C T I O N 23-24

3.4: Research Design 24-25

3.5: Data Analysis Techniques 25-28

3.6: H Y P O T H E S I S S T A T E M E N T 28

3.7: R E S E A R C H F L O W 29-30

C H A P T E R 4 :

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4 . 1 : D E S C R I P T I V E S T A T I S T I C 31-32

4.2: UNIT R O O T T E S T 32-33

4.3: C O R R E L A T I O N C O E F F I C I E N T 33-34

4.4: B R E U S C H - P A G A N L A G R A N G E M U L T I P L I E R 34

4.5: HAUSMAN T E S T 34-35

4.6: D I A G N O S T I C C H E C K S 35-36

4.7: R E G R E S S I O N T E S T 36

4.8: H Y P O T H E S E S T E S T I N G 37

CHAPTER 5 :

5.0: Introduction 38

5.1: Statistical Results 38

5.2: Conclusion 38

5.3: R E C O M M E N D A T I O N S 39

R E F E R E N C E 40-44

A P P E N D I C E S

A P P E N D I X 1 45-56

A P P E N D I X 2 57-62