Profitability determinants of Malaysia service-based industry / Siti Khadijah Halim

• Main Author: Halim, Siti Khadijah
• Format: Monograph
• Language: English
• Published: Universiti Teknologi MARA, Perlis, Faculty of Business and Management 2021
• Subjects: Financial management. Business finance. Corporation finance
• Online Access: https://ir.uitm.edu.my/id/eprint/80351/1/80351.pdf; https://ir.uitm.edu.my/id/eprint/80351/

The purpose of this paper is to explore the factors that affect a company’s profitability in Malaysia’s service-based industry. It has been stated that profitability is the most important element in a company ‘s long-term survival. Although profitability is the primary goal of all organizations, a greater focus has been placed on identifying the most crucial aspects that can influence the company's profitability. This study aims to look into the variables that may impact the company's profitability in Malaysia's service-based industry. This research analyzed two independent variables to determine their relationship towards profitability. These variables are leverage and company efficiency. The data obtained were from Eikon datastream with 14 service sector companies listed in Bursa Malaysia from 2016 until 2020. Leverage was measured by debt ratio, whereas efficiency is measured by asset turnover ratio. As a result, profitability is measured using the proxy of return on assets. In this study, the most appropriate panel data regression model was a fixed-effect model. Thus, this study reveals that in relation to return on assets, asset turnover ratio has a significant positive relationship. In contrast, it was discovered that the debt ratio is insignificant and has a negative effect on the return on assets. The outcome of this research may benefit the company of my internship workplace as they can implement the appropriate determinants to increase their company’s profitability. Additionally, the study recommends that businesses seek ways to reduce their operating expenses and implement cost-effective strategies to maximize their profitability.