Financial Distress Prediction With Altman Z-Score And Effect On Stock Price: ...inventionjournals
: This study aimed to obtain empirical evidence about the state of financial distress prediction using the Altman Z-score and ratio-ratio test Z-score in influencing the price of shares in the chemical subsectors listed in Indonesia Stock Exchange 2009-2014 period. The samples were determined by purposive sampling, while data processing using Microsoft Excel, and SPSS. Financial distress only occurs in ETWA company in 2014 in the category of bankruptcy. Effect of a Z-score to the stock price is significantly 0.004 and ratio-ratio of the Altman Z score is working capital to total assets have no significant effect amounted to 0,085, retained earnings to total assets have no significant effect amounted to 0,478, EBIT to total assets have a significant influence amounted to 0,016, and the book value of equity to book value of total debt had no significant effect of 0.078. Contribution ratio-ratio Altman Z-score of 48.6% to the stock price. In conclusion, the financial distress that are in reasonably good condition. Z-score can be used to predict stock prices, and ratios of Z-score only ebit to total assets can significantly affect stock prices partially.
Financial Distress Prediction With Altman Z-Score And Effect On Stock Price: ...inventionjournals
: This study aimed to obtain empirical evidence about the state of financial distress prediction using the Altman Z-score and ratio-ratio test Z-score in influencing the price of shares in the chemical subsectors listed in Indonesia Stock Exchange 2009-2014 period. The samples were determined by purposive sampling, while data processing using Microsoft Excel, and SPSS. Financial distress only occurs in ETWA company in 2014 in the category of bankruptcy. Effect of a Z-score to the stock price is significantly 0.004 and ratio-ratio of the Altman Z score is working capital to total assets have no significant effect amounted to 0,085, retained earnings to total assets have no significant effect amounted to 0,478, EBIT to total assets have a significant influence amounted to 0,016, and the book value of equity to book value of total debt had no significant effect of 0.078. Contribution ratio-ratio Altman Z-score of 48.6% to the stock price. In conclusion, the financial distress that are in reasonably good condition. Z-score can be used to predict stock prices, and ratios of Z-score only ebit to total assets can significantly affect stock prices partially.
Study of the Static Trade-Off Theory determinants vis-à-vis Capital Structure...inventionjournals
This paper investigates the application of the Static Trade-Off theory regarding the capital structure of the Pakistani Chemical Industry. We have used panel data analysis for the sample of 31 listed chemical firms from the period 2005 to 2013. The study is unique in its type as unlike to Shah & Hijazi (2005) who studied many industrial sections, this study only focuses on the listed Chemical Firms. We used five independent variables such as Profitability (P), Tangibility (T), Liquidity (L), Firm Size (FS) and Total Assets Growth (TAG) to study the effect on independent variable Financial Leverage (FG). The results confirmed the relationship of Profitability, Liquidity and Firm Size. However the results were not confirmed for Tangibility and Firm Assets Growth. Even though the results for Tangibility were positive, however the significance of the coefficients failed to support the hypothesis. This study hold a unique position for researchers for future research and also has significance for the investors helping them to make wise investment decisions when investing in Pakistani Chemical Industry since this industry holds a major portion of industrial GDP of the country
The Effect of Capital Structure on Firm Performance: Empirical Evidence from ...inventionjournals
International Journal of Business and Management Invention (IJBMI) is an international journal intended for professionals and researchers in all fields of Business and Management. IJBMI publishes research articles and reviews within the whole field Business and Management, new teaching methods, assessment, validation and the impact of new technologies and it will continue to provide information on the latest trends and developments in this ever-expanding subject. The publications of papers are selected through double peer reviewed to ensure originality, relevance, and readability. The articles published in our journal can be accessed online.
An Empirical Analysis on the Nature of Relationship between Capital Structure...iosrjce
The financing decision with regard to capital structure theory of finance has been a topic of many
theories and their conflicting output for past many years. This paper aims to analyse the nature of relationship
between the capital structure of a firm and its performance. The data of 40 firms excluding financial services
firms listed on Nifty indices on National Stock Exchange is studied (The composition of 50 firms on Nifty
represents a well branch out index reflecting precisely the overall market conditions). Financial services firms
have been excluded from purview of this paper, as they are in the business of collecting money and investing in
financial assets rather than producing goods, hence follow a unique business valuation model. Further financial
services sector being one of the most sensitive sectors. This paper analyzes a period of 13 years (2001-2014)
covering the phases of a business cycle starting from boom (2001/02-2006/07), recession (2007/08-2008/09)
and then recovery (2009/10-2013/14). The complete business cycle will aid to demonstrate the results more
accurately. This paper also surveys the topical developments in the empirical capital structure research. The
data for a period of 13 years is analysed using descriptive statistics, correlation and multiple regression
techniques. For research purpose, the ratios such as debt-equity ratio, debt-asset ratio and long term debt are
taken as independent variables whereas Net Profit, Net Profit Margin, ROCE, ROE and ROA are the ratios
taken as dependent variables.
stock and the firm capabilities, these are the article related to stock liquidity and firm risk taking and also shows the relation between stock liquidity and corporate governance
Idiosyncratic Effect of Corporate Solvency Management Strategies on Corporate...IOSR Journals
The study identifies and evaluates the association among corporate solvency management strategies and the corporate performance valuation in Chemical industry of Pakistan. The study uses purposive sampling or judgmental sampling for selecting 30 sample companies from the sector; covering 10 years financial statements data ranging from year 2002 to 2011. Balanced panel data is taken for the purpose of study. Levin, Lin & Chu test is used to check the stationarity of data whereas White Test is used to check the heteroskedasticity of data. Panel Least square technique with fixed effects is used to generalize the relationship between studied variables. The study observed that the performance of the chemical sector in terms of market to book value is affected by internal firm and industry specific factors related to solvency management strategic decisions. Findings of the study provide with the overview of historic performance and the potential performance of the selected sector to help policy makers including finance, economics and industry experts for creating value through the idiosyncratic resources.
Quantitative Analysis on Financial Performance of Merger and Acquisition of I...IJAEMSJORNAL
In general, Mergers and Acquisitions (M&A) are becoming more common around the world as a way to strengthen companies by raising their profile, diversifying their portfolios to reduce business risks, expanding into new markets and topographies, and exploiting economies of scale, among other things The information analysis identified by all five financial metrics, such as ROI, will provide data about profitability, liquidity, leverage, and efficiency using all seventeen ratios. T-Test is a cumulative analysis that is typically examined in detail using factual research methods that are linked to all seventeen proportions. The general analysis of financial performance and the overall scientific theory of outcomes complete the final section. Since the analyst is unable to conduct the exam on a full scale, it was done on a miniature scale. The study community includes a wide range of organisations with a wide range of business operations and unusual business practises.
Study of the Static Trade-Off Theory determinants vis-à-vis Capital Structure...inventionjournals
This paper investigates the application of the Static Trade-Off theory regarding the capital structure of the Pakistani Chemical Industry. We have used panel data analysis for the sample of 31 listed chemical firms from the period 2005 to 2013. The study is unique in its type as unlike to Shah & Hijazi (2005) who studied many industrial sections, this study only focuses on the listed Chemical Firms. We used five independent variables such as Profitability (P), Tangibility (T), Liquidity (L), Firm Size (FS) and Total Assets Growth (TAG) to study the effect on independent variable Financial Leverage (FG). The results confirmed the relationship of Profitability, Liquidity and Firm Size. However the results were not confirmed for Tangibility and Firm Assets Growth. Even though the results for Tangibility were positive, however the significance of the coefficients failed to support the hypothesis. This study hold a unique position for researchers for future research and also has significance for the investors helping them to make wise investment decisions when investing in Pakistani Chemical Industry since this industry holds a major portion of industrial GDP of the country
The Effect of Capital Structure on Firm Performance: Empirical Evidence from ...inventionjournals
International Journal of Business and Management Invention (IJBMI) is an international journal intended for professionals and researchers in all fields of Business and Management. IJBMI publishes research articles and reviews within the whole field Business and Management, new teaching methods, assessment, validation and the impact of new technologies and it will continue to provide information on the latest trends and developments in this ever-expanding subject. The publications of papers are selected through double peer reviewed to ensure originality, relevance, and readability. The articles published in our journal can be accessed online.
An Empirical Analysis on the Nature of Relationship between Capital Structure...iosrjce
The financing decision with regard to capital structure theory of finance has been a topic of many
theories and their conflicting output for past many years. This paper aims to analyse the nature of relationship
between the capital structure of a firm and its performance. The data of 40 firms excluding financial services
firms listed on Nifty indices on National Stock Exchange is studied (The composition of 50 firms on Nifty
represents a well branch out index reflecting precisely the overall market conditions). Financial services firms
have been excluded from purview of this paper, as they are in the business of collecting money and investing in
financial assets rather than producing goods, hence follow a unique business valuation model. Further financial
services sector being one of the most sensitive sectors. This paper analyzes a period of 13 years (2001-2014)
covering the phases of a business cycle starting from boom (2001/02-2006/07), recession (2007/08-2008/09)
and then recovery (2009/10-2013/14). The complete business cycle will aid to demonstrate the results more
accurately. This paper also surveys the topical developments in the empirical capital structure research. The
data for a period of 13 years is analysed using descriptive statistics, correlation and multiple regression
techniques. For research purpose, the ratios such as debt-equity ratio, debt-asset ratio and long term debt are
taken as independent variables whereas Net Profit, Net Profit Margin, ROCE, ROE and ROA are the ratios
taken as dependent variables.
stock and the firm capabilities, these are the article related to stock liquidity and firm risk taking and also shows the relation between stock liquidity and corporate governance
Idiosyncratic Effect of Corporate Solvency Management Strategies on Corporate...IOSR Journals
The study identifies and evaluates the association among corporate solvency management strategies and the corporate performance valuation in Chemical industry of Pakistan. The study uses purposive sampling or judgmental sampling for selecting 30 sample companies from the sector; covering 10 years financial statements data ranging from year 2002 to 2011. Balanced panel data is taken for the purpose of study. Levin, Lin & Chu test is used to check the stationarity of data whereas White Test is used to check the heteroskedasticity of data. Panel Least square technique with fixed effects is used to generalize the relationship between studied variables. The study observed that the performance of the chemical sector in terms of market to book value is affected by internal firm and industry specific factors related to solvency management strategic decisions. Findings of the study provide with the overview of historic performance and the potential performance of the selected sector to help policy makers including finance, economics and industry experts for creating value through the idiosyncratic resources.
Quantitative Analysis on Financial Performance of Merger and Acquisition of I...IJAEMSJORNAL
In general, Mergers and Acquisitions (M&A) are becoming more common around the world as a way to strengthen companies by raising their profile, diversifying their portfolios to reduce business risks, expanding into new markets and topographies, and exploiting economies of scale, among other things The information analysis identified by all five financial metrics, such as ROI, will provide data about profitability, liquidity, leverage, and efficiency using all seventeen ratios. T-Test is a cumulative analysis that is typically examined in detail using factual research methods that are linked to all seventeen proportions. The general analysis of financial performance and the overall scientific theory of outcomes complete the final section. Since the analyst is unable to conduct the exam on a full scale, it was done on a miniature scale. The study community includes a wide range of organisations with a wide range of business operations and unusual business practises.
A Comparative Study on Working Capital Management of Tata Motors Limited and ...Dr. Amarjeet Singh
The automobile industry in India is one of the speedily growing industry. Working Capital Management is important in this industry due to increasing demand and huge investment in this sector requires proper management. Working Capital Management perform a vital role in the success and failure of a business due to its effect on the performance and liquidity. Thereby this study has been undertaken to Comparative analyse working capital management of Tata Motors Limited and Maruti Suzuki India Limited for the period of seven years from 2013-14 to 2019-20. In this study three objectives are set for research. The first one was to assess the impact of working capital on sales, second was to assess the impact of working capital on profitability and third was to evaluate the working capital performance of the companies under study through the use of various financial ratios. The study reflects that the efficiency of working capital management of the companies is influenced by the Liquidity Ratios, Debtor Turnover Ratio, Inventory Turnover Ratio and profitability Ratio.
Cross-border and domestic merger and acquisitions are considered as fastest means
of growth and survival too. This study provides evidence on the value creation by
applying inorganic growth strategies based on a sample of Indian pharmaceutical
companies. Relying on the key financial ratios, their pre-merger and post-merger
financial performances were compared to find whether merger has affected their
performance. Based on these multiple financial ratios it has been noted that there was
no improvement found in the profitability after merger. The main motives of the mergers
and acquisitions like cost reduction, risk spreading etc were compared to the financial
results which indicates that the overall motives more or less were achieved by the
companies keeping internal factors of acquiring companies constant
In March 2019, the Korea of Minister of Strategy and Finance announced a strategy to spread the
second venture boom in cooperation with relevant ministries. You can start high-tech innovation start-ups by
strengthening your business
International Journal of Engineering Research and DevelopmentIJERD Editor
Electrical, Electronics and Computer Engineering,
Information Engineering and Technology,
Mechanical, Industrial and Manufacturing Engineering,
Automation and Mechatronics Engineering,
Material and Chemical Engineering,
Civil and Architecture Engineering,
Biotechnology and Bio Engineering,
Environmental Engineering,
Petroleum and Mining Engineering,
Marine and Agriculture engineering,
Aerospace Engineering.
FACTORS INFLUENCING ON MARKETING PERFORMANCE: THE MEDIATING ROLE OF BUSINESS ...indexPub
In a time when the world economy is undergoing unprecedented change and disruption, the role of market orientation, digital orientation or business agility becomes even more important and necessary, especially the relationship of these factors with the marketing performance of the business is a topic of great interest. This study aims to determine the impact of factors affecting marketing performance including market orientation, digital orientation. It also examines the mediating role of business agility in the relationship between market orientation, digital orientation and marketing performance.
Impact of profitability, bank and macroeconomic factors on the market capital...inventionjournals
Panel data has been collected for 44 Middle Eastern banks that are operated during 2005 to 2014 in different Middle Eastern countries. Secondary data has been collected primarily through the DataStream database. The study is conducted to investigate the impact of profitability, bank and macroeconomic factors on the market capitalization of the Middle Eastern banks. Results of Hausman test have explained that fixed effect model is appropriate for the analysis. The result of multiple regression have shown that market capitalization has positive relationship with ROI while negative relationship with credit risk, inflation, and year dummy for the Middle Eastern banks. Furthermore, no relationship has been observed between market capitalization and the ROA, ROE, growth and exchange rate for the Middle Eastern banks.
Similar to Impact of mergers and acquisitions (20)
Removing Uninteresting Bytes in Software FuzzingAftab Hussain
Imagine a world where software fuzzing, the process of mutating bytes in test seeds to uncover hidden and erroneous program behaviors, becomes faster and more effective. A lot depends on the initial seeds, which can significantly dictate the trajectory of a fuzzing campaign, particularly in terms of how long it takes to uncover interesting behaviour in your code. We introduce DIAR, a technique designed to speedup fuzzing campaigns by pinpointing and eliminating those uninteresting bytes in the seeds. Picture this: instead of wasting valuable resources on meaningless mutations in large, bloated seeds, DIAR removes the unnecessary bytes, streamlining the entire process.
In this work, we equipped AFL, a popular fuzzer, with DIAR and examined two critical Linux libraries -- Libxml's xmllint, a tool for parsing xml documents, and Binutil's readelf, an essential debugging and security analysis command-line tool used to display detailed information about ELF (Executable and Linkable Format). Our preliminary results show that AFL+DIAR does not only discover new paths more quickly but also achieves higher coverage overall. This work thus showcases how starting with lean and optimized seeds can lead to faster, more comprehensive fuzzing campaigns -- and DIAR helps you find such seeds.
- These are slides of the talk given at IEEE International Conference on Software Testing Verification and Validation Workshop, ICSTW 2022.
Sudheer Mechineni, Head of Application Frameworks, Standard Chartered Bank
Discover how Standard Chartered Bank harnessed the power of Neo4j to transform complex data access challenges into a dynamic, scalable graph database solution. This keynote will cover their journey from initial adoption to deploying a fully automated, enterprise-grade causal cluster, highlighting key strategies for modelling organisational changes and ensuring robust disaster recovery. Learn how these innovations have not only enhanced Standard Chartered Bank’s data infrastructure but also positioned them as pioneers in the banking sector’s adoption of graph technology.
Securing your Kubernetes cluster_ a step-by-step guide to success !KatiaHIMEUR1
Today, after several years of existence, an extremely active community and an ultra-dynamic ecosystem, Kubernetes has established itself as the de facto standard in container orchestration. Thanks to a wide range of managed services, it has never been so easy to set up a ready-to-use Kubernetes cluster.
However, this ease of use means that the subject of security in Kubernetes is often left for later, or even neglected. This exposes companies to significant risks.
In this talk, I'll show you step-by-step how to secure your Kubernetes cluster for greater peace of mind and reliability.
Enchancing adoption of Open Source Libraries. A case study on Albumentations.AIVladimir Iglovikov, Ph.D.
Presented by Vladimir Iglovikov:
- https://www.linkedin.com/in/iglovikov/
- https://x.com/viglovikov
- https://www.instagram.com/ternaus/
This presentation delves into the journey of Albumentations.ai, a highly successful open-source library for data augmentation.
Created out of a necessity for superior performance in Kaggle competitions, Albumentations has grown to become a widely used tool among data scientists and machine learning practitioners.
This case study covers various aspects, including:
People: The contributors and community that have supported Albumentations.
Metrics: The success indicators such as downloads, daily active users, GitHub stars, and financial contributions.
Challenges: The hurdles in monetizing open-source projects and measuring user engagement.
Development Practices: Best practices for creating, maintaining, and scaling open-source libraries, including code hygiene, CI/CD, and fast iteration.
Community Building: Strategies for making adoption easy, iterating quickly, and fostering a vibrant, engaged community.
Marketing: Both online and offline marketing tactics, focusing on real, impactful interactions and collaborations.
Mental Health: Maintaining balance and not feeling pressured by user demands.
Key insights include the importance of automation, making the adoption process seamless, and leveraging offline interactions for marketing. The presentation also emphasizes the need for continuous small improvements and building a friendly, inclusive community that contributes to the project's growth.
Vladimir Iglovikov brings his extensive experience as a Kaggle Grandmaster, ex-Staff ML Engineer at Lyft, sharing valuable lessons and practical advice for anyone looking to enhance the adoption of their open-source projects.
Explore more about Albumentations and join the community at:
GitHub: https://github.com/albumentations-team/albumentations
Website: https://albumentations.ai/
LinkedIn: https://www.linkedin.com/company/100504475
Twitter: https://x.com/albumentations
DevOps and Testing slides at DASA ConnectKari Kakkonen
My and Rik Marselis slides at 30.5.2024 DASA Connect conference. We discuss about what is testing, then what is agile testing and finally what is Testing in DevOps. Finally we had lovely workshop with the participants trying to find out different ways to think about quality and testing in different parts of the DevOps infinity loop.
Maruthi Prithivirajan, Head of ASEAN & IN Solution Architecture, Neo4j
Get an inside look at the latest Neo4j innovations that enable relationship-driven intelligence at scale. Learn more about the newest cloud integrations and product enhancements that make Neo4j an essential choice for developers building apps with interconnected data and generative AI.
GridMate - End to end testing is a critical piece to ensure quality and avoid...ThomasParaiso2
End to end testing is a critical piece to ensure quality and avoid regressions. In this session, we share our journey building an E2E testing pipeline for GridMate components (LWC and Aura) using Cypress, JSForce, FakerJS…
In the rapidly evolving landscape of technologies, XML continues to play a vital role in structuring, storing, and transporting data across diverse systems. The recent advancements in artificial intelligence (AI) present new methodologies for enhancing XML development workflows, introducing efficiency, automation, and intelligent capabilities. This presentation will outline the scope and perspective of utilizing AI in XML development. The potential benefits and the possible pitfalls will be highlighted, providing a balanced view of the subject.
We will explore the capabilities of AI in understanding XML markup languages and autonomously creating structured XML content. Additionally, we will examine the capacity of AI to enrich plain text with appropriate XML markup. Practical examples and methodological guidelines will be provided to elucidate how AI can be effectively prompted to interpret and generate accurate XML markup.
Further emphasis will be placed on the role of AI in developing XSLT, or schemas such as XSD and Schematron. We will address the techniques and strategies adopted to create prompts for generating code, explaining code, or refactoring the code, and the results achieved.
The discussion will extend to how AI can be used to transform XML content. In particular, the focus will be on the use of AI XPath extension functions in XSLT, Schematron, Schematron Quick Fixes, or for XML content refactoring.
The presentation aims to deliver a comprehensive overview of AI usage in XML development, providing attendees with the necessary knowledge to make informed decisions. Whether you’re at the early stages of adopting AI or considering integrating it in advanced XML development, this presentation will cover all levels of expertise.
By highlighting the potential advantages and challenges of integrating AI with XML development tools and languages, the presentation seeks to inspire thoughtful conversation around the future of XML development. We’ll not only delve into the technical aspects of AI-powered XML development but also discuss practical implications and possible future directions.
LF Energy Webinar: Electrical Grid Modelling and Simulation Through PowSyBl -...DanBrown980551
Do you want to learn how to model and simulate an electrical network from scratch in under an hour?
Then welcome to this PowSyBl workshop, hosted by Rte, the French Transmission System Operator (TSO)!
During the webinar, you will discover the PowSyBl ecosystem as well as handle and study an electrical network through an interactive Python notebook.
PowSyBl is an open source project hosted by LF Energy, which offers a comprehensive set of features for electrical grid modelling and simulation. Among other advanced features, PowSyBl provides:
- A fully editable and extendable library for grid component modelling;
- Visualization tools to display your network;
- Grid simulation tools, such as power flows, security analyses (with or without remedial actions) and sensitivity analyses;
The framework is mostly written in Java, with a Python binding so that Python developers can access PowSyBl functionalities as well.
What you will learn during the webinar:
- For beginners: discover PowSyBl's functionalities through a quick general presentation and the notebook, without needing any expert coding skills;
- For advanced developers: master the skills to efficiently apply PowSyBl functionalities to your real-world scenarios.
Why You Should Replace Windows 11 with Nitrux Linux 3.5.0 for enhanced perfor...SOFTTECHHUB
The choice of an operating system plays a pivotal role in shaping our computing experience. For decades, Microsoft's Windows has dominated the market, offering a familiar and widely adopted platform for personal and professional use. However, as technological advancements continue to push the boundaries of innovation, alternative operating systems have emerged, challenging the status quo and offering users a fresh perspective on computing.
One such alternative that has garnered significant attention and acclaim is Nitrux Linux 3.5.0, a sleek, powerful, and user-friendly Linux distribution that promises to redefine the way we interact with our devices. With its focus on performance, security, and customization, Nitrux Linux presents a compelling case for those seeking to break free from the constraints of proprietary software and embrace the freedom and flexibility of open-source computing.
Full-RAG: A modern architecture for hyper-personalizationZilliz
Mike Del Balso, CEO & Co-Founder at Tecton, presents "Full RAG," a novel approach to AI recommendation systems, aiming to push beyond the limitations of traditional models through a deep integration of contextual insights and real-time data, leveraging the Retrieval-Augmented Generation architecture. This talk will outline Full RAG's potential to significantly enhance personalization, address engineering challenges such as data management and model training, and introduce data enrichment with reranking as a key solution. Attendees will gain crucial insights into the importance of hyperpersonalization in AI, the capabilities of Full RAG for advanced personalization, and strategies for managing complex data integrations for deploying cutting-edge AI solutions.
Encryption in Microsoft 365 - ExpertsLive Netherlands 2024Albert Hoitingh
In this session I delve into the encryption technology used in Microsoft 365 and Microsoft Purview. Including the concepts of Customer Key and Double Key Encryption.
GDG Cloud Southlake #33: Boule & Rebala: Effective AppSec in SDLC using Deplo...James Anderson
Effective Application Security in Software Delivery lifecycle using Deployment Firewall and DBOM
The modern software delivery process (or the CI/CD process) includes many tools, distributed teams, open-source code, and cloud platforms. Constant focus on speed to release software to market, along with the traditional slow and manual security checks has caused gaps in continuous security as an important piece in the software supply chain. Today organizations feel more susceptible to external and internal cyber threats due to the vast attack surface in their applications supply chain and the lack of end-to-end governance and risk management.
The software team must secure its software delivery process to avoid vulnerability and security breaches. This needs to be achieved with existing tool chains and without extensive rework of the delivery processes. This talk will present strategies and techniques for providing visibility into the true risk of the existing vulnerabilities, preventing the introduction of security issues in the software, resolving vulnerabilities in production environments quickly, and capturing the deployment bill of materials (DBOM).
Speakers:
Bob Boule
Robert Boule is a technology enthusiast with PASSION for technology and making things work along with a knack for helping others understand how things work. He comes with around 20 years of solution engineering experience in application security, software continuous delivery, and SaaS platforms. He is known for his dynamic presentations in CI/CD and application security integrated in software delivery lifecycle.
Gopinath Rebala
Gopinath Rebala is the CTO of OpsMx, where he has overall responsibility for the machine learning and data processing architectures for Secure Software Delivery. Gopi also has a strong connection with our customers, leading design and architecture for strategic implementations. Gopi is a frequent speaker and well-known leader in continuous delivery and integrating security into software delivery.
Unlocking Productivity: Leveraging the Potential of Copilot in Microsoft 365, a presentation by Christoforos Vlachos, Senior Solutions Manager – Modern Workplace, Uni Systems
2. International Journal of Management Research and Development (IJMRD) ISSN 2248-
938X (Print), ISSN 2248-9398 (Online) Volume 3, Number 2, April - May (2013)
114
mergers and acquisitions deals, India occupies the second position in the world. India’s
growth curve is ascendant. Pharmaceutical, Information Technology, Automotive component
and Textile companies are on an acquisition binge in Europe sparking speculation that India
is getting aggressive in craving out their presence in Europe.
LITERATURE REVIEW
Extensive research is available in context to M&A, for the purpose of this study a
brief review of few studies has been taken in understand the areas of merger, their impact on
the financial performance of acquirer and target companies and the research problem is
formulated for further investigation in this area.
S. Vanitha 2007 compare the financial performance of the pre and post mergers of the
firms which have undergone mergers and acquisitions in the period 2001-2002, 58
manufacturing firms was taken as total population and 17 companies were taken as sample
size. Financial performance of the firm is evaluated using Liquidity, Solvency and
Profitability ratios, to find out the business expansion of the firm’s Capital Formation and
Investment are used. The finding report that there was good indication of the quick ratios
show improvement in post merger period. Net worth, Capital formation, ROI showed
improved performance in post merger period. The conclusion emerging from the point of
view of financial evaluation is that the merging companies were taken over by companies
with reputed and good management.
Fulbag Singh 2008, studies the impact of mergers on corporate performance in India
in a sample of 56 companies merged between 1994 and 2002 the companies listed on
Bombay Stock Exchange. The motives behind the merger deals and the sources of
profitability of merger deals are investigated in the study. Accounting based performance is
measured using three categories 1. Profitability2. leverage and 3.Liquidity. Results show that
profitability declines significantly after the merger. Current ratio, debt equity ratio and size
show a negative impact on profitability measure .Interest coverage ratio contributes positively
towards profitability. Thus the results highlights that the firms could not improve their
improvement even after five years and decline is observed in matching firms also. The firms
would improve their performance in passage of time when the size of the firm increases.
SabooSidharath and Gopi, Sunil 2009examines the performance of Indian companies
that have undergone through mergers in India and Abroad. The analysis verified their impact
on the operating performance of merging companies and analyzed their valuation in
domestic, cross broader acquisitions. The sample consists of 54 firms engage in mergers in
the period 2000 to 2007. The results of the average one year pre and post merger and two
year pre and post mergers have shown the improvement positively and the impact on cross
border and domestic acquisitions was different. Thus the study confirm about the positive
impact on the financial performance and the type of acquisitions play important role in the
mergers.
Indumathi 2011 identifies the wealth enhancement with respect to mergers, which
help in assuring the success of mergers. The liquidity position determines the company
financial position and whether able to run the business smoothly. The study examines the
liquidity position of both acquirer and target companies in pre and post merger period. The
sample consists of 93 companies which underwent merger during the period 01.04.2002 to
31.3.2005. The sample size was confined to 13. To measure the liquidity performance of 13
firms, current ratio, quick ratio, net working capital and ‘t’ test was used. The results
3. International Journal of Management Research and Development (IJMRD) ISSN 2248-
938X (Print), ISSN 2248-9398 (Online) Volume 3, Number 2, April - May (2013)
115
conclude that the share holders of the acquirer companies partly increased their wealth in turn
increased the returns on investments after the merger event. Thus findings conclude the
acquirer companies always benefit than the target companies in the merger event.
Empirical studies byVanitha, Selvam and Indhumathi provide evidence on the
positive impact of mergers on the financial performance of the firm. However the study by
Fulbag Singh shows the adverse effect of mergers on the performance of the merger. These
conflicting results make the effect of mergers and acquisitions as a business strategy
inconclusive. Therefore, the study is required to answer the M&As effects on the
performance of the firm and their impact on the across sector in Indian industries.
STATEMENT OF THE PROBLEM
Companies’ use the M&As strategy not only to expand their business but also to get
benefits such as cost saving, technology up gradation, capturing market across boundaries.
Indian organization are moving forward to achieve global status through M&As. This effect
is spread to almost all sector in India namely Information Technology, Pharmaceutical
industry, Construction, Textile industry etc. However, most of the empirical studies have
deeply concentrated on the analysis of financial performance of both acquirer and target firm
in the pre- and post -merger period. There has been no comprehensive analysis attempted to
analyze on the impact of M&As on the financial performance of different industries in India.
Hence, in order to fill this gap in research, the present study attempts to analyze the financial
performance ratio of acquiring firm of different industries in pre- and post-merger period.
NEED FOR THE STUDY
The mergers and acquisitions is a critical endeavor for the firms using it both as a part
of a strategy for growth or survival, for such critical processes, performance measures must
be used and the management must be in the position to react and take necessary steps for
achieving the end results of the acquisitions. Therefore, there is a need to study the impact of
the mergers and acquisitions on the financial performance of the firm, which would be
helpful for accessing the success of the mergers. Many studies have been conducted to
analyze the acquiring and target companies in pre - and post- merger periods from the share
holders’ and firm point of view. It is equally important to analyze from the view point of
acquiring firms on the financial performance in different industry in India, to see if there are
variations in the impact, for different industries.
OBJECTIVES OF THE STUDY
The following are the objectives of the study.
To evaluate the pre- merger and post-merger financial performance of the acquirer companies
pertaining to different industries in India.
HYPOTHESIS OF THE STUDY
To test the objectives mentioned above, the following hypotheses were formulated:
1. Ho: There is no significant difference between the financial performance of the
acquiring firm after the merger
2. Ha: There is a significant difference in the financial performance of the acquiring
firm after the merger
4. International Journal of Management Research and Development (IJMRD) ISSN 2248-
938X (Print), ISSN 2248-9398 (Online) Volume 3, Number 2, April - May (2013)
116
METHODOLOGY OF THE STUDY
Sample Selection
There are about 115 companies which underwent acquisitions within and across
industry during the study period from 01.04.2009 to 31.03.2010. For the purpose of analysis
on the different industries, it was decided to select all the companies pertaining to different
industries. But only for 33 companies, the required data for analysis were available in the
Capitaline database. Hence the sample size of this study is confined to 33 and the list was
further divided into industry wise. The final sample for the study had the industry-wise
breakup is shown in the table1.
List of Mergers used in the study
Sl.No Acquirer Company Target company
Date of Merger
Announcement
Industry
1 Prism Cement Ltd
H & R Johnson (India)
Ltd
08/08/2009
Cement And
Construction
2
UltraTech Cement
Ltd
Samruddhi Cement Ltd 16/11/2009
Cement And
Construction
3
Nila Infrastructures
Ltd
Pearl Stockholdings
Pvt. Ltd
17/09/2009
Cement And
Construction
4
Vijay Shanthi
Builders Ltd
High End Homes Pvt.
Ltd
12/01/2009
Cement And
Construction
5 Titagarh Wagons Ltd
Titagarh Steels
Ltd(merged)
30/03/2009
Cement And
Construction
6 BASF India Ltd Ciba India Ltd 14/09/2009 Chemicals & Sugar
7 GulshanPolyols Ltd Salil Industries Ltd 12/10/2009 Chemicals & Sugar
8
Shirpur Gold
Refinery Ltd
Kala Kosh Auctions
Pvt Ltd
15/12/2009 Commodities
9
Ess Dee Aluminium
Ltd
India Foils
Ltd(merged)
15/01/2009 Commodities
10 Suraj Stainless Ltd Suraj Ltd 27/07/2009 Commodities
11 Siemens Ltd
Siemens Healthcare
Diagnostics
Ltd(merged)
01/12/2009
Electronics &
Electric Equipment
12
Cable Corporation of
India Ltd
Prithvi Consultancy
Services Pvt Ltd
09/02/2009
Electronics &
Electric Equipment
13
Centum Electronics
Ltd
Solectron EMS India
Ltd
12/10/2009
Electronics &
Electric Equipment
5. International Journal of Management Research and Development (IJMRD) ISSN 2248-
938X (Print), ISSN 2248-9398 (Online) Volume 3, Number 2, April - May (2013)
117
14 Graphite India Ltd GKW Ltd 27/03/2009
Electronics &
Electric Equipment
15
K E C International
Ltd
RPG Cables
Ltd(merged)
30/10/2009
Electronics &
Electric Equipment
16
T.V. Today Network
Ltd
Radio Today
Broadcasting Ltd
30/07/2009 Entertainment
17
UTV Software
Communications Ltd
UMP Plc 20/07/2009 Entertainment
18
Zee Entertainment
Enterprises Ltd
ETC Networks Ltd 23/12/2009 Entertainment
19
Kumbhat Financial
Services Ltd
Common Wealth
Micro Finance (India)
Ltd
25/11/2009 Finance
20
WalchandPeoplefirst
Ltd
WalchandTalentFirst
Ltd
31/07/2009 Finance
21 Oswal Leasing Ltd
Vanaik Spinning Mills
Ltd
03/03/2009 Finance
22
GlodyneTechnoserve
Ltd
Compulink Systems
Ltd(merged)
28/10/2009
Information
Technology
23
BGIL Films &
Technologies Ltd
Kriti Communications
Pvt Ltd
18/05/2009
Information
Technology
24
Indrayani Biotech
Ltd
Indrayani Tissue
Culture Pvt Ltd
27/07/2009 Miscellaneous
25
Oricon Enterprises
Ltd
Zeuxite Investments
Pvt Ltd
31/10/2009 Miscellaneous
26
Kirloskar Engines
India Ltd
Kirloskar Industries
Ltd
30/03/2009 Oil & Refineries
27
Ruchi Soya
Industries Ltd
Palmtech India Ltd 09/02/2010 Oil & Refineries
28
Reliance Industries
Ltd
Reliance Petroleum
Ltd
02/03/2009 Oil & Refineries
29
Dhunseri Petrochem
& Tea Ltd
South Asian Petrochem
Ltd
15/12/2009 Oil & Refineries
30 Dabur India Ltd
Fem Care Pharma
Ltd(merged)
26/10/2009
Pharma And
Health Care
31 Emami Ltd
Zandu Pharmaceutical
Works Ltd
19/06/2009
Pharma And
Health Care
32 Country Condo's Ltd
Country Club
Bangalore Ltd
24/11/2009
Pharma And
Health Care
33
Intas
Pharmaceuticals Ltd
ZoraPharma Ltd 09/12/2009
Pharma And
Health Care
6. International Journal of Management Research and Development (IJMRD) ISSN 2248-
938X (Print), ISSN 2248-9398 (Online) Volume 3, Number 2, April - May (2013)
118
Period of the Study
The present study covers a period of one year from 1st
April 2009 to 31st
March 2010.
In order to evaluate the financial performance of sample companies on a comparative basis,
three years before merger and three years after merger were considered.
Sources of Data
The present study depends on secondary data. The required data on financial
performance before and after the merger were collected for the sample period. The data for
each of the sample company were obtained from Capitaline, bse-india.com and
moneycontrol.com. The additional data were also collected from the books, articles in various
journals, magazines and newspaper.
Tools Used
The present study attempts to measure and analyze the pre- and post-merger
performance of acquiring firm in industries wise by using profitability ratios, liquidity ratios,
solvency ratio and managerial efficiency ratio. In order to analyze the financial performance
of the acquiring firm in industries wise, the paired sample t-test is employed on the selected
key financial ratios.
ANALYSIS OF FINANCIAL PERFORMANCE OF ACQUIRING FIRMS IN
DIFFERENT INDUSTRIES
The pre-merger and post-merger period on the financial performance of the firm were
carried out with the help of financial ratios, the averages were computed for the entire set of
sample firms, which have gone through mergers in the period 2009-2010. The average ratios
for each of the industry sub-samples were also computed. Average pre-merger and post-
merger financial performance ratios were compared to see if there any improvement in the
financial performance due to acquisitions, using “paired sample t-test” at 95% confidence
level.
1. Cement and Construction
The results indicate that the profitability ratios of the acquisition firm in the cement
industries shows mixed results, the earning per share shows a marginal increase in the
post-merger period, whereas the return on capital employed showed decrease in the post-
merger period from (0.1841 to 0.0935). The liquidity ratio i.e. current ratio there has been
increase in the post-merger period (1.847 to 2.1). The long term solvency ratio – Debt-
equity ratio, there is no significant changes due to the merger, the interest coverage ratio
shows decline in post-merger period (26.00 to 9.72) and the decline is not statistically
significant. The managerial efficiency ratio is determined by inventory turnover ratio also
shows decline in post-merger period.
The results from the Table-2 of the cement industries suggest that though there was
marginal increase in the mean value of EPS& Current ratio, the changes was not
statistically significant.
7. International Journal of Management Research and Development (IJMRD) ISSN 2248-
938X (Print), ISSN 2248-9398 (Online) Volume 3, Number 2, April - May (2013)
119
Table 2: Pre-merger and Post-merger financial ratios of acquiring firm in Cement and
Construction
Pre-merger mean
value
Post-merger Mean
Value
t-value (0.05
Significance)
Earnings per share 22.19 23.67 0.789
Return on Capital
employed 0.1841 0.0935 0.159
Current Ratio 1.847 2.1 0.418
Debt- Equity ratio 0.5827 0.5267 0.792
Interest Coverage ratio 26 9.7287 0.197
Inventory turn over ratio 6.153 6.3687 0.842
2. Chemicals and Sugar
The results show that the mean value in post-merger EPS shows an increase from
(13.91 to 20.87) and the decline was statistically significant, the return on capital
employed mean value shows decline (0.1267 to 0.095). The liquidity ratio shows no
changes in the post-merger period. The long term solvency ratio i.e. debt-equity ratio
there has been a decline in the mean value, it provides the positive results due to merger.
The interest coverage ratio there has been increase in the post-merger period from (28.03
to 38.57), the‘t’ test confirm that it was not significant. The inventory turnover ratio
declined in post-merger period (12.35 to 8.96)
The results from the Table-3, confirms that only in EPS there has been statistical
difference and it has been positive in post-merger period, though the decline in post-
merger of debt-equity ratio favored due to merger, still the difference is not significant.
The other ratios there was no statistical difference found in post-merger period.
Table 3: Pre-merger and Post-merger financial ratios of acquiring firm in Chemicals and
Sugar
Pre-merger mean
value
Post-merger Mean
Value
t-value (0.05
Significance)
Earnings per share 13.91 20.87 0.045*
Return on Capital
employed 0.126 0.095 0.57
Current Ratio 1.77 1.77 0.965
Debt- Equity ratio 0.691 0.24 0.546
Interest Coverage ratio 28.03 38.57 0.44
Inventory turn over ratio 12.35 8.96 0.268
*s-significant at 0.05 level
8. International Journal of Management Research and Development (IJMRD) ISSN 2248-
938X (Print), ISSN 2248-9398 (Online) Volume 3, Number 2, April - May (2013)
120
3. Commodities
The results showed that there was marginal increase in the EPS in the post-merger
period, the other profitability measure return on capital employed shows marginal
decrease in the post-merger period from (0.04 to 0.01). The liquidity position of the firm
in the current ratio indicates no much difference due to merger. The solvency ratio shows
decrease in the mean value from (2.04 to 0.77), the interest coverage ratio shows declined
in post-merger period from (3.93 to 1.74) and the ‘t’ test confirms that there was not
much difference due to impact of mergers. The managerial efficiency ratio shows
increase in the commodities industries from (6.34 to 13.43).
The results from the Table-4 of the commodities industries confirm that there was an
increase in the earning per share and the‘t’ test confirm the same results. The other ratios
results shows though the decline is observed in post-merger period, still it is not
significant.
Table 4: Pre-merger and Post-merger financial ratios of acquiring firm in Commodities
Pre-merger mean value
Post-merger Mean
Value
t-value (0.05
Significance)
Earnings per share 7.96 8.02 0.987
Return on Capital
employed 0.04 0.167 0.642
Current Ratio 1.48 1.436 0.888
Debt- Equity ratio 2.04 0.776 0.287
Interest Coverage ratio 3.93 1.74 0.081
Inventory turn over
ratio 6.34 13.43 0.329
4. Electronics and Electric equipment
The results showed that there was increase in the mean value of the current ratio (1.20
to 1.38) and in inventory turnover ratio of (7.63 to 8.36), there was significant decline in
the EPS from (14.08 to 9.60) and the decline is also observed in return on capital
employed in the mean value from (0.154 to 0.076), debt-equity ratio (0.88 to 0.55) and
inventory turnover ratio from (22.06 to 16.37).
The results from the Table-5, confirm there was statically difference in the EPS, the
other financial ratios results provide that though there were decline in the mean values,
still no significant difference is found in the post-merger period.
9. International Journal of Management Research and Development (IJMRD) ISSN 2248-
938X (Print), ISSN 2248-9398 (Online) Volume 3, Number 2, April - May (2013)
121
Table 5: Pre-merger and Post-merger financial ratios of acquiring firm in Electronics and
Electrical equipment
Pre-merger mean
value
Post-merger Mean
Value
t-value (0.05
Significance)
Earnings per share 14.08 9.6 0.05*
Return on Capital
employed 0.154 0.076 0.178
Current Ratio 1.2 1.38 0.294
Debt- Equity ratio 0.88 0.55 0.153
Interest Coverage ratio 22.06 16.37 0.68
Inventory turn over
ratio 7.63 8.36 0.382
*s-signficant at 0.05
level
5. Entertainment
The results from the Table-6 shows that there was not much difference found in the
mean values of the post-merger period in the return on capital employed (0.08 to 0.01)
and in debt-equity ratio (0.34 to 0.33). There has been increase in the mean values of EPS
(5.29 to 8.75), Current ratio (2.02 to 2.35) and in interest coverage ratio of (174.3 to
199.74), there has been decline in the inventory turnover ratio from (2.76 to 1.25).
The overall results from the entertainment industries proved to be mixed, there was no
significant difference found in the financial performance in this industries.
Table 6: Pre-merger and Post-merger financial ratios of acquiring firm in Entertainment
Pre-merger mean value
Post-merger Mean
Value
t-value
(0.05
Significance
Earnings per share 5.29 8.75 0.41
Return on Capital
employed 0.08 0.016 0.539
Current Ratio 2.02 2.35 0.64
Debt- Equity ratio 0.34 0.33 0.94
Interest Coverage ratio 174.3 199.74 0.942
Inventory turn over
ratio 2.76 1.25 0.185
6. Finance
The results from the Table-7 shows that the profitability ratios there was decline in the
post-merger period in earning per share (35.95 to 4.85), in return on capital employed
from (0.07 to 0.04). The liquidity ratios and solvency ratio shown improvement in the
mean values in the post-merger period in current ratio (14.53 to 18.25), in debt-equity
ratio from (0.003 to 0.1067) and in interest coverage ratio from (-11.11 to 2.05). The
10. International Journal of Management Research and Development (IJMRD) ISSN 2248-
938X (Print), ISSN 2248-9398 (Online) Volume 3, Number 2, April - May (2013)
122
decline is observed in the managerial efficiency ratio i.e. inventory turnover ratio from
(0.89 to 0.56).
The results from the finance industries conclude that there was marginal increase in
the liquidity and solvency ratios, but the profitability and the efficiency ratios shows
decline in the mean value. The ‘t’ test results confirm that there was no statistical
difference due to merger in the finance industries.
Table 7: Pre-merger and Post-merger financial ratios of acquiring firm in Finance
Pre-merger mean value
Post-merger Mean
Value
t-value (0.05
Significance)
Earnings per share 35.95 4.85 0.428
Return on Capital
employed 0.07 0.04 0.428
Current Ratio 14.53 18.25 0.617
Debt- Equity ratio 0.003 0.146 0.423
Interest Coverage ratio -11.11 2.05 0.396
Inventory turn over
ratio 0.89 0.56 0.423
7. Information Technology
The results shows from the Table-8 provide that there was increase in the mean value
in post-merger period of EPS, debt-equity ratio, inventory turnover ratio, in the EPS the
mean value increased from (8.68 to 22.22), the debt equity ratio mean value (0.10 to 0.17)
and in inventory turnover ratio there was significant increase in the post-merger period
from (51.35 to 357.54), though there was increase in the mean value of the ratios, t-test
confirm the increase is not significant. There is decrease in the mean value of the return
on capital employed from (0.16 to 0.3), current ratio (4.21 to 1.52) and interest coverage
ratio (7.73 to 5.24).
The variations observed in the mean value in the IT industry’s proved to be mixed and
there was no significant difference found due to merger.
Table 8: Pre-merger and Post-merger financial ratios of acquiring firm in Information
Technology
Pre-merger mean value
Post-merger Mean
Value
t-value (0.05
Significance)
Earnings per share 8.68 22.22 0.49
Return on Capital
employed 0.16 0.13 0.5
Current Ratio 4.21 1.52 0.366
Debt- Equity ratio 0.1 0.17 0.451
Interest Coverage ratio 7073 5.24 0.5
Inventory turn over ratio 51.35 357.54 0.148
11. International Journal of Management Research and Development (IJMRD) ISSN 2248-
938X (Print), ISSN 2248-9398 (Online) Volume 3, Number 2, April - May (2013)
123
8. Miscellaneous
The results shows that there were significant decline in the EPS from (2.86 to 2.41), in
return on capital employed there was an increase in the mean value from (-1.42 to 0.17).
The liquidity ratio showed an increase in post-merger period from (1.08 to 1.23). There
was increase in the inventory turnover ratio from (17.57 to 18.88). The decline is
observed in the debt-equity ratio of (0.41 to 0.08) and in interest coverage ratio from
(1.24 to 0.33).
The overall results from the Table-9 shows that mixed results is observed in the financial
performance of the firm in this industries and no difference is found due to acquisitions.
Table 9: Pre-merger and Post-merger financial ratios of acquiring firm in miscellaneous
Pre-merger mean
value
Post-merger Mean
Value
t-value (0.05
Significance)
Earnings per share 2.86 2.41 0.5
Return on Capital
employed -1.42 0.17 0.504
Current Ratio 1.08 1.23 0.873
Debt- Equity ratio 0.41 0.08 0.144
Interest Coverage ratio 1.24 0.33 0.737
Inventory turn over
ratio 17.57 18.88 0.881
9. Oil and Refineries
The number of companies covered in these industries is four. The results observed
from the Table-10 are mixed. There was decrease in the mean value in the EPS from
(53.93 to 41.67) and in return on capital employed in the mean value (0.16 to 0.08),
interest coverage ratio the decline is from (14.30 to 5.64) and in inventory turnover ratio
mean value from (12.15 to 4.83). The increase in the mean value of post-merger period is
seen in the current ratio and debt-equity ratio.
The results from the oil and refineries provide no significant difference in the post-
merger period.
Table 10: Pre-merger and Post-merger financial ratios of acquiring firm in oil and refineries
Pre-merger mean value
Post-merger Mean
Value
t-value (0.05
Significance)
Earnings per share 53.93 41.67 0.77
Return on Capital
employed 0.162 0.085 0.176
Current Ratio 1.04 1.18 0.182
Debt- Equity ratio 0.31 0.4 0.16
Interest Coverage ratio 14.3 5.64 0.344
Inventory turn over
ratio 12.15 4.83 0.464
12. International Journal of Management Research and Development (IJMRD) ISSN 2248-
938X (Print), ISSN 2248-9398 (Online) Volume 3, Number 2, April - May (2013)
124
10. Pharmaceuticals and Health care
The number of companies is four in these industries. The results show that there were
significant differences observed in debt-equity ratio with marginal increase in the mean
value in the post-merger period. The increase in the post-merger period value is also seen
in interest coverage ratio. The other ratio like profitability, liquidity ratio and the
managerial efficiency ratio observed declined in the post-merger period.
The results from the pharmaceuticals industries as shown in the Table -11 indicates
that no significant difference is observed due to merger in the post-merger period, except
the debt-equity ratio there was significant increase in the value after merger.
Table 11: Pre-merger and Post-merger financial ratios of acquiring firm in pharmaceuticals
Pre-merger mean value
Post-merger Mean
Value
t-value (0.05
Significance)
Earnings per share 23.8 14.15 0.477
Return on Capital
employed 0.205 0.192 0.881
Current Ratio 1.36 1.15 0.385
Debt- Equity ratio 0.35 0.517 0.05*
Interest Coverage ratio 16.59 20.86 0.563
Inventory turn over ratio 7.8 7.07 0.466
*s- significant at 0.05
level
ANALYSIS OF ALL MERGERS IN THE SAMPLE
The comparison of the pre-merger and post-merger financial performance ratios for
the entire sample set of acquiring firms from the Table -12 shows that there was no
significant improvement due to mergers. The mean value of return on capital employed,
current ratio, interest coverage ratio and inventory turnover ratio shows marginal increase in
the mean values and ‘t’ test confirms the non-significance. The decrease in the mean values is
observed in the earning per share and debt- equity ratio and not statistically significant.
Table 12: Pre-merger and Post-merger financial ratios of all the acquiring firm in the sample
Pre-merger mean value
Post-merger Mean
Value
t-value (0.05
Significance)
Earnings per share 18.63 16.22 0.545
Return on Capital
employed 0.03 0.08 0.623
Current Ratio 2.81 3.14 0.552
Debt- Equity ratio 0.63 0.45 0.08
Interest Coverage ratio 27.72 28.23 0.983
Inventory turnover ratio 10.14 28.88 0.169
13. International Journal of Management Research and Development (IJMRD) ISSN 2248-
938X (Print), ISSN 2248-9398 (Online) Volume 3, Number 2, April - May (2013)
125
CONCLUSION
This study was undertaken to test whether the industry type has an impact on the
mergers of the acquiring firm in terms of the financial performance ratios like profitability,
liquidity, solvency and managerial efficiency ratios. The results from the analysis of the
financial ratio of the acquiring firm in the sample shows that there was no significant impact
on different industries due to mergers. Type of industries in merger does not make any
difference in the performance of the acquiring firm.
LIMITATIONS OF THE STUDY
The study has not undertaken the target group for analysis and the study is restricted
to the type of the industries and further research in this area could be extended on the firm
level and from share-holder point of view. Another limitation of the study is the study period
and the sample size of merger in each industry is too small, which might bring in question of
validity of results and these areas are extended for further research.
REFERENCES
1. S. Vanitha, M. Selvam 2007 “Financial Performance of Indian Manufacturing
Companies During Pre and Post Merger”International Research Journal of Finance
and Economics ISSN 1450-2887 Issue 12 (2007)
2. Fulbag Singh, Monika Mogla “Impact of Mergers on Profitability of Acquiring
Companies” The IUP Journal of Mergers and Acquisition June 2008. Reference #31J-
2008-06-03-01.
3. Saboo, Sidharth and Gopi, Sunil “Comparison of Post-Merger performance of
Acquiring Firms (India) involved in Domestic and Cross-border acquisitions”MPRA
Paper No. 19274, posted 13. December 2009
4. Indhumathi. G, M. Selvam, and M. Babu. (2011). The effect of mergers on corporate
performance of acquirer and target corporate firms in India. Euro Journals Publishing,
Inc. Issue 1.