Financial condition of Malaysian property companies and relationship with financial ratios and macroeconomic factors

The main objective of this research was to analyse the financial conditions of selected companies in the property sector listed in Bursa Malaysia. Further, this research also investigated the significant relationships between the financial ratios (leverage, profitability, liquidity) and macroeconomic factors in evaluating the financial condition of property companies measured by Altman Z-score. The research covered 45 property companies listed in Bursa Malaysia as a sample. The five-year financial data (from 2014 to 2018) were collected from Bursa Malaysia Marketplace Database and the company’s annual reports. Statistical Package for the Social Sciences (SPSS) software was employed to analyse the data by using linear regression analysis in identifying the significant relationship of the financial condition of property companies with the financial ratios and macroeconomic factors. The findings of this research found that nine to fourteen property companies were financially distressed for the period between 2015 and 2018, and the companies with small market
capitalization had a higher tendency to experience financial distress. The research also reveals that the significant relationships between leverage, profitability, and liquidity represented by debt ratio (DR), return on assets (ROA), and current ratio (CR), respectively, with the financial condition of property companies. Meanwhile, none of the macroeconomic variables was found to have a significant relationship. Overall, this research could assist corporate managers, fund managers, financial analysts, and investors in monitoring the financial health of property companies from being categorized as financially distressed companies.