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VOL. 3, ISSUE 1 (2021)
The effect of leverage and liquidity on financial performance: Evidence from Vietnam
Authors
Thuan Thi Nguyen, Hang Thu Dang
Abstract
This paper empirically examines effect of leverage and liquidity on financial performance of Vietnamese firms using data collected from companies listed on the stock market in Vietnam during 2008-2019. The study adopted multiple regression method, with Generalized Least Squares as estimation technique. Return on equity and Return on assets are used measure of financial performance. Liquidity of Vietnamese listed enterprises is measured by current assets to current liabilities, whereas leverage is measured by debt to equity ratio. The results of correlation and regression analysis showed that there is a significant negative relationship between leverage and financial performance while liquidity has significant positive relationship with profitability, whereas days accounts receivables and days accounts payables has no correlation with firm’s performance. From this result, this article has provides helpful ideas and empirical evidence on the effect of leverage and liquidity on financial performance of the companies mentioned in Vietnam. The results show that there is a need to balance the components of the capital structure so as to obtain the optimal mix which will yield maximum growth to the firm and returns to the shareholders. The findings of this article might useful for manager, analysts, regulators, investors and other stakeholders.
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Pages:50-55
How to cite this article:
Thuan Thi Nguyen, Hang Thu Dang "The effect of leverage and liquidity on financial performance: Evidence from Vietnam ". International Journal of Social Science and Humanities, Vol 3, Issue 1, 2021, Pages 50-55
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