The primary role of the balance sheet is to report the company's assets, "economic resources," liabilities, "economic liabilities," and equity over a specific period where total assets must equal total liabilities and equity "owners' residual claims." The assets are shown in relation to its cash liquidity, and the liabilities relate to its maturity date. 3. Leverage ratio. The leverage ratio provides the data on long-term solvency in a company.
Profitability ratios
The gross profit margin ratio is calculated by dividing gross profit by sales (see Table 10 and Figure 10). Analysis: From 2015 to 2018, gross profit margins are positive, which indicates that the firm is profitable.
Debt management ratios
Interest earned over time is measured by dividing the “EBIT” profit before interest tax by the accrued interest. The higher the ratio, the better, as it shows that the company is covering interest from its profits.
The conclusions
A comparative analysis of tax and revenue trends in the Middle East and North Africa (MENA) region. The Diffusion of Accounting Innovations in the New Public Sector as Affected by IMF Reforms: Actor-Network Theory.
Introduction
In addition, the implication of this chapter is to provide a scholarly repertoire in Islamic accounting, particularly related to the Islamic banking sector. In the same year (1963), with the establishment of the Islamic Savings Bank of Malaysia, a Hajj Savings Bank was also established.
Discussion
- Islamic accounting
- Islamic ethical principles
- Islamic financial transactions
- Islamic bank financial statements
The implementation of justice in business activities is in the form of the principle of muamalah, which prohibits the existence of elements: usury (the element of interest in all its forms and types, both usury nasiah and fadhl); tyranny (elements that harm oneself, others and the environment); maisyir (gambling elements and speculative nature); gharar (element of darkness); and haram (haram elements in both goods and services and related operational activities);. The client is the owner of the skills or expertise, divided based on the agreed ratio.
Conclusions
Furthermore, it explains the development of Islamic Financial Accounting Standards (IFAS), including how the standards are developed (the due processes). The first part of this chapter takes a closer look at the rise and development of Islamic banks (IBs) in Indonesia.
Islamic banks (IBs) in Indonesia 1 Islamic banking emergence in Indonesia
Islamic banking in Indonesia: Theory and practice
Islamic commercial banks are full-fledged Islamic banks that offer only Islamic financial products and operate according to Islamic principles. As the distinction between conventional and Islamic banks, all stakeholders demand Islamic compliance as the fundamental value of Islamic banks.
Recent development of Islamic banking in Indonesia
The future of Islamic banking in Indonesia is promising if stakeholders, especially the government, commit to the development of the industry. The size of Islamic banks is considerably low compared to their counterparts, which leads to the low lending capacity.
Indonesia Islamic banking way forward
In addition, the "new" bank, Bank Syariah Indonesia, has the opportunity to join BUKU 4 by increasing the scale of the economy so that it can significantly contribute to the national economy. This merger appeared as the commitment of the Indonesian government to support the development of Islamic banking.
Islamic accounting in Indonesia 1 History
Recent development
From the SIFAS above it can be seen that the DSAS IAI does not only focus on accounting standards for commercial activities. However, DSAS IAI also pays great attention to the aspects of social finance (Social Islamic Finance), namely the issuance of SIFAS 109 and SIFAS 112.
Conslusion
After its establishment, the development of Islamic banks became more stable and evident over time. This momentum marked the commitment of the government and stakeholders to boost the development of Islamic banking in Indonesia.
ESG principle in the financial sector
ESG risks: relevance and assessment
In general, we can maintain that ESG risks can be defined as the negative materialization of ESG factors by their counterparties or invested assets [3]. The assessment of ESG risks is done using three different methods—portfolio alignment method, risk framework method and exposure method.
Climate-related risks
It is a measure of the financial support that banks are willing to give to sustainable activities. It is clear that banks are exposed to a large and complex number of risks and aspects of the same risk [4].
Banking regulation
Banking supervision and ESG factors
ESG factors are ESG issues that can have different impacts on the financial performance of banks, because they can turn into ESG risks as financial risks as they are in the analysis of the supervisory process and in particular of the assessment of the viability and sustainability of the banks' business model. New business models and a new and more effective supervisory function should be a forward-looking assessment of the future business environment.
Analysis of the business model and the ESG risk perspective
Therefore, supervisors are interested in forward-looking analyzes carried out by the banks themselves, non-financial reports that contain a lot of information useful for detecting the level of attention to sustainable economy, and ESG assessments of the bank.
ESG risks and capital adequacy
When determining the capital requirement, the maturity of the loan portfolio is increasingly important to absorb the impact of ESG risks. The baseline is linked to an assessment of awareness of how ESG risks drive credit risk for an individual portfolio and link to the bank's risk appetite framework.
Conclusion
The assessment of short- and medium-term liquidity needs, in particular whether ESG risks could lead to a net cash outflow that could negatively impact the institution's liquidity position. The analysis of ESG risks is still at an early stage, also because it is not yet easy in the banking business, but it is also relevant for the supervisory authority to assess whether the internal capital is sufficient to cope with these risks.
Appendix 1 – ESG risks timeline implementation
Appendix 2 – Climate regulation timeline implementation
Literature review
- Bank specific determinants .1 Asset structure
- Industry-specific determinants .1 Ownership
- Macroeconomic determinants .1 Inflation
Hypothesis 5—There is a significant relationship between income diversity and bank profitability (with no defined sign). Hypothesis 6—There is a significant relationship between the growth rate of deposits and bank profitability (no defined sign).
Research design
- Sample data
- Sample variables .1 Dependent
- Methodology
Results
- Descriptive statistics
- Discussion results
Also, an increase in the loan portfolio can result in a high risk of credit default. In fact, hypothesis 6 is confirmed according to the result obtained in the research of Dietrich and Wanzenried [3] and Garcia and Guerreiro [19].
Conclusion
This chapter examines the adverse effects of pandemics on the economy and shows how financial markets and financial institutions were affected and how they responded to the pandemics. The fourth part analyzes company characteristics in relation to their responses to the adverse effects of the pandemic.
Pandemic and financial market 1 Prior pandemic
- Why is the COVID-19 crisis different from other crises?
- Equity market and COVID-19
In light of the growing disruptions caused by the COVID-19 pandemic, the flow of information related to the pandemic is critical. 41] suggested that the impact of COVID-19 on the European and US stock markets has a spillover effect on the Asian stock markets, especially China.
Alternative investment and COVID-19
All things considered, it is unclear whether gold is acting as a safe haven during the COVID-19 turmoil. Given all this evidence, it seems that which asset is considered a safe haven during the COVID-19 turmoil.
Corporate in the midst of the pandemic
Corporate governance practices are being tested and questioned in the wake of the COVID-19 outbreak. The impact of the COVID-19 pandemic will be as devastating to the global economy as it has been in previous crises.
Literature review and hypothesis development
- Liquidity and working capital
- Leverage and profitability
The main objective of this study is to understand the impact of liquidity measures on the financial performance of wine companies. As evidence, there is no consensus on the existence and quality of the relationship between liquidity and profitability.
Research methodology
- Data and sample selection
- Study variables
- Data analyses
This suggests that the impact of leverage on performance is highly context dependent, and theories such as pecking order, capital structure, and agency theory may help explain the discrepancies [35]. Other research shows mixed or non-linear results when it comes to the impact of financial leverage on performance [46, 47].
Empirical results
Finally, NWC (2.4266e-09) has a statistically significant positive influence on ROA and is significant at the 5% level. Apart from these results, the F-value in fixed effects is highly significant, which means that the model has adequate fit measures (Table 2).
Discussion
In this sense, it is not possible to accept the first hypothesis of this study.
Conclusion, implications, and limitations
The impact of working capital management on corporate profitability in different business cycles: evidence from Finland. The main purpose of this chapter is therefore to demonstrate empirically to what extent working capital management influences measures for evaluating firm performance.
Literature review and hypothesis definition
- Average collection period (ACP)
- Average stocking period (ASP)
- Average payments period (APP)
- Cash conversion cycle
- Current ratio
- Leverage
- Firm size
- Tangible fixed assets
H4: There is a significant relationship between the CCC and the firm's performance measures (with no predicted sign). H6: There is a significant relationship between leverage and the company's performance measures (with no predicted sign).
Data, variables, and methodology
- Sample
- Selection and description of variables
43], some of the advantages associated with the use of this methodology are control of individual heterogeneity, correction of. As a result, endogeneity may be a problem in the model of the present work and thus it is necessary to keep it controlled.
Results and discussion
- Model 1: estimation
- Model 2: estimation
- Model 3: estimation
- Model 4: estimation
- Model 5: estimation
- Model 6: estimation
However, in estimating model 1, one of the variables that was positively related to ROA was leverage. Considering the results presented in Table 9, it is possible to verify that when the sample of Portuguese companies is used with ROE as a performance measure, the number of significant variables increases significantly.
Conclusions
- The IFRS adoption process
- Some key terms
If IFRS are not adopted to the same extent worldwide, the central purpose of international standards may be compromised. Thus, at the country level, "adoption" should mean that the national set of accounting standards is directly replaced by the IFRS issued by the IASB.
The history and legitimacy of IFRS
- Background of IFRS diffusion: economic integration and global financial crisis
- The history and development of the IASB
- The development and adoption of IFRS around the world
The IASB is primarily funded through fundraising activities, which are the responsibility of the IFRS Foundation. The governance, oversight and standard-setting processes of the IASB are similar to those of the FASB in the United States.
Chapter summary
An investigation of the relationship between the use of international accounting standards and the source of company financing in Germany. Another debate on the issue of the entrenchment of managers is that of the presence of women on boards.
Board diversity
- Gender diversity
- Education of directors
- Board independence
Several research studies highlight the importance of director education level on board effectiveness and strategic choices. Some empirical studies determine the quality of education by the prestige of the schools attended [33, 34].
Research methodology 1 Sample and data
- Measures
- Descriptive statistics
- Models
The first equation of our study relates the age of the executive (AGEDIR) and the characteristics of the boards of directors, namely gender diversity (FEM), the percentage of independent directors (INDEP), the education of the directors: (GEST) for managers, (JURI) for legal experts, (ING) for engineers, as well as the attendance of higher schools (GE). The second equation of our study relates the seniority of the executive (ANCDIR) and the characteristics of the boards of directors, namely gender diversity (FEM), the percentage of independent directors (INDEP), the education of the directors: (GEST) for managers, (JURI) for legal experts, (ING) for engineers, as well as attending higher schools (GE).
