1.

Descriptive Findings

The data used are formed from Bangkok Bank Berhad’s financial statement from the year

of 2011 to 2015. The relationship between liquidity risk in the term of current ratio (CR) with

company size in terms of total assets (TA) and profitability in the forms of return on assets

(ROA), return on equity (ROE), and leverage are measured by Pearson and Spearman’s

correlations. CR is measuring the capacity of the organization to pay for its present commitments

given the extent of its present liabilities.

ROA is measuring the amount of an arrival the organization can produce given the level

of aggregate resources that it has; ROE measures the amount of an arrival of organization can

create in the period given on the aggregate value that the shareholders contribute; and leverage is

measuring the amount of capital that comes in the form of debt.

Current Assets Current Liabilities Current Ratio (CR) Total Assets (TA)

2011 RM2,573,867 RM2,119,767 1.21422166 RM2,707,204

2012 RM3,076,227 RM2,637,122 1.16650917 RM3,231,996

2013 RM3,361,783 RM2,934,095 1.14576488 RM3,552,393

2014 RM4,707,994 RM4,152,038 1.13389955 RM4,961,142

2015 RM4,029,825 RM3,478,397 1.15852935 RM4,303,371

ROA ROE Equity Leverage Net Profit After Tax

2011 0.00537233 0.02649595 548,914 3.93192741 RM21,467

2012 0.00459004 0.02652086 559,371 4.77791126 RM14,835

2013 0.00440323 0.02733115 572,314 5.2070699 RM15,642

 2014 (0.00132671) (0.00859407) 765,877 5.47772684 RM(6,582)

2015 0.00323886 0.01780213 782,940 4.49642501 RM13,938

*all RM value added with ‘000

ROA
0.006
0.005
0.004
0.003 ROA
0.002
0.001
0
-0.001 2011 2012 2013 2014 2015

-0.002

ROE
0.03
0.025
0.02
0.015 ROE
0.01
0.005
0
-0.005 2011 2012 2013 2014 2015
-0.01
-0.015
 Leverage
6
5
4
Leverage
3
2
1
0
2011 2012 2013 2014 2015

From the chart above, we can see that Bangkok Bank Berhad experienced the unstable

trend in terms of profitability. It shows that the ROA slightly decrease from 2011 until 2013, and

it dramatically declining in 2014. It happens because their liability is so high, as we know high

liabilities means the assets of the firm is owed by the creditors or shareholders. They have to gain

the return in order to satisfy the shareholders and to obtain the creditor’s trust, and also to keep

their profitability stable. And it also because they are not gaining any profit, conversely they

having losses. But, on the next year, their ROA, and ROE is dramatically increase, because they

minimize the liabilities that they lend, and they gain enough profit.

ROA is one of the most largely used profitability ratios because it is related to profit

margin and assets turnover, and it shows the rate of return to both investors and creditors of the

company. It does not matter if the company having a low profit margin, because it has the asset

turnover. ROA is actually measuring how good the company manages its cost and use its

resources. Bangkok Bank has shown that they are having an unstable financial condition for 4

years. The return on asset is declining from 2011 until 2013, and the peak was on 2014. But, it

was increasing back on 2015.

 The equity is increasing each year, it means that the shareholders trust the company and

keep investing on them. The leverage is increasing from 2011 until 2014 it means that the debt

that the company lend is increasing each year, and the peak was on 2014. In 2015 the leverage

slightly goes down, it means that the debt that they lend is decreasing.

ROE is the product of the operating performance, asset turnover, and debt –equity

management. It measures how good the company manages their debt to increase returns for

shareholder, and getting higher revenue than the cost of debt itself. On the chart above, we can

say that Bangkok Bank had a slightly increasing ROE from 2011 until 2013, and it decreasing

dramatically on 2014.

Liquidity
1.24
1.22
1.2
1.18
Liquidity
1.16
1.14
1.12
1.1
1.08
2011 2012 2013 2014 2015

On this chart, it shows the liquidity of the firm, which is how fast the asset of the firm is

sold in the market, without even influencing the asset’s price. The element to measure the

liquidity is current ratio, which is the result of current assets divided by current liabilities. As we

see on the chart above, the liquidity of the firm is decreasing from 2011 to 2014. It means that
the liquidity risk of the company for those 4 years is increasing; the company ability to meet

short term financial demand is so risky. Furthermore, they manage to decrease their liquidity risk

by reducing their liability on 2015.

Table result, Correlation Matrix Panasonic Manufacturing Specific Risk

Determinants to Profitability

Pearson

Correlation ROA ROE LEVERAGE LIQUID GDP

ROA 1

ROE .988 1

Sig. .001

LEVERAG

E -.695 -.585 1

Sig. .097 .150

LIQUID .688 .572 -.935 1

Sig. .099 .157 .010

GDP -.685 -.740 .264 -.131 1

Sig. .101 .076 .334 .417

Table Result, Coefficient Stepwise Regression analysis for Panasonic Manufacturing

Specific Risk Determinants to Profitability

Variables B t Sig.

ROE .154 57.322 .000

LIQUID .016 11.884 .007

LEVERAGE -.177 -4.109 .054

GDP .103 .729 .542

Model Summaryc

Adjusted R Std. Error of Durbin-

Model R R Square Square the Estimate Watson

1 .988a .977 .969 .0004672

2 1.000b 1.000 .999 .0000676 1.323

a. Predictors: (Constant), ROE

b. Predictors: (Constant), ROE, Current Ratio

c. Dependent Variable: ROA

 ANOVAa

Sum of

Model Squares df Mean Square F Sig.

1 Regression .000 2 .000 3123.633 .000c

Residual .000 2 .000

Total .000 4

a. Dependent Variable: ROA

b. Predictors: (Constant), ROE

c. Predictors: (Constant), ROE, Current Ratio

Leverage measured by debt to equity ratio with P value < 0.10 indicates that leverage to one of

profitability measurement which is ROA has negatively significant relation. However, the

leverage to ROE has negative insignificant relation with P value > 0.10. This negative

relationship implied that when leverage increase the profitability will decrease. This negative

relation could relate to the debt issue of the bank that issuing much debt instrument that reduce

the profitability since the obligation that needed to pay in time, if it is not fulfilled the company

can be forced by bankruptcy. The influence of leverage is relatively high compared to the GDP,

however the impact is not quite high which represented by t value= -4.109.