1.1 to meet its short-term financial obligations. The ratio

1.1  Definition of Terms

Banking and finance
industry

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The
banking and finance industry which encompasses of a wide range of businesses
that manage money, including credit-card firms, insurance firms, accountancy
firms, consumer-finance firms, stock brokerages, investment funds, individual
managers and some government-sponsored enterprises.

     

      Financial ratio analysis

 A ratio analysis is a
quantitative analysis of information contained in a firm’s financial statements
and it is
performed by comparing two items in the financial statements in a firm. Ratio
analysis is used to evaluate various aspects of a firm’s operating and
financial performance across industries, big and small such as its solvency,
liquidity and profitability to identify their
strengths and weaknesses.

 

 

 

 

      Profitability performance

Profitability
performance is measure by using profitability ratios which is the measuring of
how effectively the firm uses its assets to make profits. The ratios that is
used is return on total asset, return on common equity and net interest margin.

 

      Solvency and Liquidity Performance

Solvency
performance is the
ability of a company to meet its long-term financial obligations whereas liquidity performance shows
a firm’s ability to meet its short-term financial obligations. The ratio used
is cash deb coverage ratio and cash dividend coverage ratio.

 

 

1.2  Conclusion

This
chapter provides an overview of what this research is about. This research is
intended to measure the financial ratio analysis of eight local commercial
banks in Malaysia in the banking and finance industry which is Affin Bank Berhad,
Alliance Bank Malaysia Berhad, AmBank (M) Berhad, CIMB Bank Berhad, Hong Leong
Bank Berhad, Malayan Banking Berhad, Public Bank Berhad and RHB Bank Berhad.
The introduction is about the banking and finance industry and financial ratio
analysis. Besides, there is a highlight about the problem statement. Follow by
the research objective, research question and research framework that used to
provide guidance for the correct direction of this research. Lastly is the
significant of the study, limitation of study and definitions of terms. By
doing so, the information that gathered in this chapter can be serve as
precedence for the following chapters. In the next chapter, there have further
discussion on the Banking and finance industry and financial ratio analysis.