Financial Performance Literature Review

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2.1 Introduction This chapter reviews literature is examine on the financial performance and distress a case of Malaysian construction companies. And then, some model to solve the firms problem in financial. 2.2 Financial Performance Financial Performance is used to track and review an organization’s progress against its strategic plan and specific performance goals. While financial performance measures is important to drive a company or to individual projects to ensure that deadlines are met and costs are controlled, etc., it is essential for the Project Manager to understand how the project itself supports the organization’s strategy, and how the project will impact or influence the organization’s key plan and growth. Financial performance…show more content…
In the early study on relationship between capital structure and a firm’s reaction to short term financial distress had shown the result that high-leverage firms are more possible than their less leverages counterparts to react operationally to short-term distress. The high-leverage firms are also more possible to take personal actions such as restructuring assets and lying off employees when performance deteriorates. Apart from that, a firm with high leverage will react quickly in financial through cutting down dividend, restructuring debt and bankruptcy (Ofek,…show more content…
The ability to anticipate financial distress is considered necessary to the users of financial statement especially to those who use them in their planning such as manage, investors, creditors and auditors (Wan Ismail, Raja Ahmad, Kamarudin and Yahaya, 2005). Researchers had put their interest in predicting the financial distress model to guide the policy makers and managers to take corrective measures and possible prevention in the firms. According to Ugurlu and Aksoy (2006) the prediction of financial distress had been a field of study by many researchers during the last 70 years. Most of the distress has occurred after the economic crisis which implies that economic downturns and the industry characteristics seem to emphasize the impact of incorrect policies adopted by the corporations. Ko and Lin (2006) agreed that financial distress forecasting plays an increasing important role because the radical changes in the global economy. It helps the professionals and the public to make a more precise decision in the current intense commercial competition
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