Impact of Financial Leverage
On The Company’s Financial Performance
Department of Finance & Accounting
Done by: Rana Al-Otaibi
ID: S11102351
Supervised by: Dr.Jamal Alden Faleel
Abstract
The study aimed to investigate the impact of financial leverage on the performance of
Saudi firms, due to the highly importance of financial leverage in achieving the
sufficient returns or losses. The study used statistical methods that include regression
analysis, while having a sample that was gathered from the Saudi stock exchange for
a period of two years, having debt ratio as independent variable representing financial
leverage & ROA and ROE as dependent variables representing the performance. The
study results indicated that there is a statistically significant relationship between the
independent variable & (ROE), however there is no significant relationship between
the independent variable & (ROA). Finally, the study concluded that there is a
positive relationship between the debt ratio and ROE, meaning that the financial
leverage negatively affect one of the measures of performance.
Table of content
Chapter one: Introduction
1.1 Aim of the Research
1.2 Problem statement
1.3 Objectives of the Research
1.4 Scope of the research
1.5 Methodology
1.6 Importance
Chapter two: Literature review
2.1 over view of leverage
2.2 types of leverage
2.3 the effect of financial leverage
2.4 the advantages & disadvantages of financial leverage
2.5 conflicting theories on impact of financial leverage on performance
Chapter three: Methodology
3.1 Hypothesis
3.2model used
3.3 Sample used
3.4 variables of the study
Chapter four: Analysis
4.1 ROE results
4.2 ROA results
Chapter five: Conclusion & recommendation
Acknowledgment
3
Introduction
Financial leverage is traditionally viewed as the use of borrowed money in the firm
capital structure, through the use of fixed income securities, such as: loans & bonds. It
has a significant influence on the company’s ability to achieve its ultimate goal,
which is maximizing the shareholders wealth. Generally, increased in leverage
results increase in retunes and risk, whereas decreases in leverage results in decreases
in returns and risk. However, the use of leverage is associated with two different
possible outcomes either positive (maximizing the profit) or negative
(minimizing the profits, and putting the company at risk because of the high debt
& risk level).
Previous studies examined the effect of financial leverage on the performance of the
firms. Suggesting a negative relationship between the financial leverage & the
performance of the firms, because an increase in the level of financial leverage
increases the finance cost, hence the profitability of the firms decreases because of the
relatively increased interest payments. One the other hand, other studies that has been
conducted on the subject showed a positive relationship between financial leverage &
the performance of the firms. This Research is also conducted to find out the impact
of financial leverage on the performance of the firms listed in the Saudi stock
exchange.
4
1.1 Aims of the Research
To draw a conclusion on the effect of financial leverage on the financial performance,
taking evidence from the Saudi firms listed on the Saudi stock exchange market.
1.2 Problem statement:
Does Financial Leverage affect the financial performance of Saudi firms listed in
the Saudi stock exchange?
1.3 Objectives of the research:
The objective of conducting this research, as follow:

To identify the impact of financial leverage on the financial performance of
the firm.

To identify the nature of the relationship between the financial leverage used
by the Saudi firms and their profitability.

To conduct statistical applications while discovering the nature of the
relationship between the dependent & independent variable.

To create an opportunity for future research to be conducted on the subject.
5
1.4 Scope of the research
The scope of the study is the Saudi firms listed in the Tadawal (Saudi stock exchange
market) & shows indicators of a good performance.
1.5 Methodology
This research will investigate the impact of the Financial Leverage on the financial
performance of the Saudi firms, by examining the nature of the relationship between
financial leverage and the profitability of the firms. Through conducting quantitative
methods that include statistical techniques including: Regression Analysis (Cross
sectional panel data analysis), and Having return on equity & return on assets as the
dependent variables representing profitability, and debt ratio as a proxy variable of
financial leverage. The sample is gathered from the Saudi stock exchange “Tadawual”
based on criteria of selection that is centered around firms that are preforming well in
the market, excluding firms in the financial sector, banking & finance, and insurance
because of the specific nature of their activates.
1.6 Importance
Financial leverage is an influential factor on the company’s returns & risk,
forming a critical part of the capital structure (combination of debt & equity).
6
It can significantly affect the value of the firm in a negative or positive way, as it
magnifies the return & risk. Thus, concluding the impact of financial leverage on
the performance & profitability of the Saudi firms listed in Tadwal, would be
beneficial for the financial mangers of companies that operate in Saudi, as it will
provide an insight on the impact of financial leverage in a no interest based
financial system & how it may affect the financial performance.
In addition, identifying the nature of the relationship between leverage & the
profitability of firms will help the financial manger when making decisions that
include measuring
& evaluating leverage, particularly when making capital
structure decisions. Furthermore, conducting the study and drawing a conclusion
regarding the problem statement mentioned above, will give an opportunity to
future research to be conducted on the basis of these conclusions.
7
2.0 Literature Review
2.1 Overview
Financial management is a term that is always used in the business world; it is
concerned with the making of critical & major financial decisions that are highly
influential & affects the success of the business.
Financial management decisions can be divided into three main areas of decisions, as
follow:

Investment decisions, it includes:
o
Capital budgeting decisions (investment in fixed assets).
o Working capital decisions (investment in current assets).

Dividend decision, whereby the financial managers have to make decisions
regarding the net profit distribution. This area of decisions has two main parts:
o The dividend to be paid for shareholders, (dividend polices).
o

The determination of the amount of retained profits.
Financial decisions, concerned with raising funds or capital funding options,
considering the different types of source, the cost, and the time period.
8
Capital structure is the core of the financial decisions. As it has many risk & return
implications, that contribute heavily in the success or failure of a business.
Furthermore, capital structure is the determinant of funding options that will
finance the operations of the company (debt/ equity funding combinations) through
examining the different options of financing, such as: the mix of debt & equity,
bonds, bank loans, lease financing…
In addition, the capital structure of a firms serves as a base for making other
decisions & polices, such as mergers, buyouts, dividend polices. Finally, while
making these decisions financials mangers have to take into consideration the
ultimate goal of capital structuring, which is to maximize the shareholders wealth &
to minimize the cost of financiering.
2.2 Types of leverage
As mentioned earlier, the performance of a company can be influenced by many
factors, and the financial structure of a firm is considered one of the most influential
factors due to its impact on profitability. It is concerned with the structuring of the
funds obtained through the capital structuring of the firm, including both equity &
short/long term liabilities.
Leverage is a major component of the financial structure of firms, and unlike other
causes of risk the management has complete control over the risk resulting from
9
leverage. It exists whenever a company has fixed costs whether in the firm’s
operational or financial activates, meaning having operational leverage or financial
leverage. Both of the two types of leverage affect the profitability of the firms,
however in this research we will be examining the effect of financial leverage on the
profitability of firms.
There are three types of leverage: operational leverage, financial leverage, total
leverage, the three types of leverage can be defined conceptually & based on the
general income statements as follow:
Operating leverage which is “ the potential use of fixed operating costs to magnify the
effects of changes in sales on the firms earning’s before interest and tax” 1. It is based
on the relationship between a firm’s sales revenue and its earnings before interest and
taxes; the operational leverage arises when an enterprise has a relatively large amount
of fixed costs in its total costs. Hence, The impact of change in the level of output on
the operation income is termed operating leverage.
Financial leverage often referred to as “trading on the equity”, it is financial technique
that involves the use of additional borrowed funds (fixed-cost debt instruments) to
maximize the return in equity. Provided that it is a positive financial leverage
(meaning that the rate of return is higher than the cost of borrowing).
10
The Financial leverage can be defined as the “potential use of fixed financial costs
(debts) to magnify the effects of change in earning before interest & tax on the firm’s
earning per share” 1, it is concerned with relationship between the firm’s earning
before interest and tax and the common stock earning per share. Financial leverage is
used in many business transactions, especially where financing by bonds or preferred
stock instead of common stock are involved. In short, the impact of a change in the
extent to which the firm’s assets are financed with borrowed money on the earning
per share of the company is termed financial leverage.
Total leverage reflects the impact of operating & financial leverage on the total risk of
the firm, it is the combined effect resulting from the use of both financial &
operational leverage. It is defined as “ the potential use of operational & financial
fixed costs tools to magnify the effects of sales on the firm’s earning per share” 1.
2.3 The Effects of Financial Leverage
According to the trade off theory, (Kraus & Litzenberger,1973) the optimal capital
structure is determined by balancing the positives & negative effects of financial
leverage. In other words, balancing the benefits of debt financing, that includes: tax
savings, reducing agency cost, with the cost associated with the debt, that include
direct and indirect bankruptcy costs.
Furthermore, the use of financial leverage proven to be beneficial when the
investment made by the leverage earn returns more than the cost of debt. Miller
11
(1977) suggested that although that debt financing is affiliated with a higher chance of
bankruptcy risks & costs. These disadvantages are relatively small as compared to the
tax shield that associates the use of financial leverage.
On the other hand, financial leverage may have a negative impact if the investment
that has been mad did not achieve sufficient returns (higher than the cost of debt)
having no recognizable income to shield, meaning that the if the returns is lower than
the cost of debt the company will be at a higher risk due to the level of debt they
undertook, resulting in reducing the over all value of the company.
Furthermore, Baxter (1967) suggested that the use of financial leverage is linked to a
higher possibility of bankruptcy risks & financial defaults. Due to the commitment
that is associated with the use of debts, such as the periodic interest payments, and the
principle paid by the company, and because of these risks shareholders will demand a
higher return, which puts the company in a critical situation.
In conclusion, financial leverage form a major part of the capital structure of a firm,
thus it has a recognizable influence on the firm’s ability to achieve its ultimate goal.
But it has two reversed effects with two different outcomes, and possibilities that vary
in each industry. By studying the possible effect of leverage on Saudi companies
12
performance, insight will be given to financial manager and it will assist them while
making financial management decisions.
2.4 Advantages & Disadvantages of Financial Leverage (Farhana, 1994)
The profitability of business in not solely determined by their success in the business
world, rather there are many other influencing factors. The use of financial leverage in
the capital structure of firms is one of the factors that contributes heavily in the
success or failure of companies, based on their ability to balance the general positive
& negative possible effects of it. Mentioned below the major advantages &
disadvantages of financial leverage that could be the reason behind the firm’s
profitability if it was managed effectively.
Advantages:

The tax shield benefits & the risk level associated with the debt financing makes it
less expensive than equity financing.

From investors point of view investing in debt securities is less risky than
investing in publicly trading stocks, as debt securities is not subjects to the risks
associated with the stock market.

Through debt financing the company is no longer affected by changes in the
interest rate that occur in the market.
13

The cost of issuing long-term securities such as: bonds & loan contracting is lower
than the cost of stock issuing.
Disadvantages:

The use of financial leverage causes an increase in the company’s financial
risk (bankruptcy risk).

The nature of some of the types of debt financing (bonds), requires the
company to have a large amount of money at maturity.

As a result of the high risk that associate the use of the use of debt securities,
the company becomes subject to more restrictions.

Obtaining long-term loans may be difficult for small companies that are new
in the market.
14
2.5 Conflicting theories on the impact of financial leverage on performance
The effect of financial leverage on firm’s performance have been studied by many
researchers over the years, as it plays an important role in forming the success of
firms, and achieving the sufficient returns.
Akhtar, (2012) conducted a study aiming to discover the impact of leverage on
corporate financial performance, answering whither the “companies with high rates of
profitability are seeking to increase leverage? ”. Using a sample from the oil & energy
companies sector, to measure the effect of leverage on the different performance
measures, including: rate of return on assets index, return on equity, the number of
times to cover benefits and debt, the ratio of dividends to equity, net operating profit,
growth in sales, and earnings per share. The study concluded that the use financial
leverage results in improved financial situation, in another words showing that there is
a positive relationship between leverage & the performance of the companies.
Furthermore, Subai'i (2012) also studied the relationship between financial leverage
& return on assets in the Kuwaiti economic sector, having a sample that consisted of
fifty-four companies from the Kuwaiti public shareholding companies. The study
results showed that there is positive relationship between financial leverage & return
on investment for all of the economy sectors.
15
Al-Tally (2014), have also researched the effect of financial leverage on firms
financial performance in Saudi Arabia’s public listed companies. The study sample
was 57 publicly trading firms listed in Saudi stock exchange for the years 2002-2010.
Independent variable used in the study were financial leverage & zakat whereas
financial performance was used as dependent variable. To discover the relationship
among the variables several techniques were used including: maximum & mean factor
analysis, standard deviation, ANOVA and SPSS Software.
The overall results concluded that positive relationship between financial leverage
and performance.
The studies mentioned above provided empirical evidence supporting the theory of
the financial leverage positive effect on the performance of the company, however
other studies that have been conducted on different samples showed different results.
As the study of Jameel (2013), where he concluded that the financial leverage
negatively affects the accounting performance measures, and the market value of the
firms and this impact extends for several subsequent years. The objective of the study
was to examine the impact of financial leverage on the different performance
measures, and to discover which one of them would be the more affected by financial
16
leverage. Testing the hypothesis on a sample that was extracted from firms listed at
Palestinian Security Exchange (consisting of twenty publicly listed corporations
during the period 2004-2011). Using the multi regression model, and return on assets
(ROA) return on equity (ROE), return on sales (ROS), and sales growth as accounting
performance measures, and Tobin’s q to measure & represent the market value of the
company.
Hashemi and Zadeh (2012), also concluded from their study that companies that have
high leverage will distribute less profits to shareholders when compared to companies
with low leverage, as result of the reversed correlation between financial leverage &
dividend policy. The above was concluded when they conducted a study aiming to
test the effect of financial leverage on dividend policy, using multiple regressions on a
sample of 74 public joint stock companies of the companies listed on Tehran Stock
Market in the period between 2003-2010.
Tanni, (2012) tested the affect of working capital polices & financial leverage on the
performance of “45” Jordanians firms listed in the ASE stock exchange. Aiming to
find the relationship between profitability & debt, profitability & size, profitability &
debt. Using the SPSS statistics to determine the nature of the relationships mentioned
above, test of correlation, ANOVA, and multiple regression analysis were performed.
17
The finding indicated that firm’s working capital management polices, financial
leverage, and size have a significant relationship to the net income, ROE, and ROA.
Furthermore, the study conclude that that working capital polices and size have a
positive affect on profitability/ performance, while financial leverage have a negative
effect on profitability.
18
3. Methodology
3.1 Model used:
As the research aims to investigate the impact of financial leverage on the
performance of the Saudi firms listed in Saudi stock exchange. Quantitative
methods have been conducted, to discover the nature of the relationship between
financial leverage and the profitability measures. The study used multiple
regression model, using cross sectional panel data were used to check the
hypothesis.
General form of the model used is
yit = α + β Xit + ε it
Where
yit = Is the measure of dependent variable of firm i and time t
α = The intercept of the equation
βi = The change co-efficient for Xit variables
Xit = The different independent variables for firm i at time t
i = The number of the firms i.e. i = 1, 2, 3….N
t = The time period i.e. t = 1, 2, 3…T
If we convert the above general equation to this study it will be:
ROEit = α + β1(D/Ait ) + β2 (SZit ) + εit …...…………….. (1)
19
ROE = Return on Equity
SZ = Size
D/A= Debt ratio
ε = The error term
ROAit = α + β1(D/Ait ) + β2 (SZit ) + εit ………………..…….. (2)
………………..…….. (2)
ROA = Return on Equity
SZ = Size
D/A= Debt ratio
ε = The error term.
3.2 Methodology Quantitative
3.3 Sample
The sample consists of (26) financial statements of Saudi firms listed in the Saudi
stock exchange for a period of 2 years (2011-2012). The criteria of selection were
centered on firms that are preforming well in the market. Excluding firms with
missing data & firms operating in the financial sector, banking & finance, and
insurance, due to their irregular capital structure that is not comparable to the
normal capital structure of non-financial firms.
3.4 Variables:
First: Dependent variables
Performance/profitability of firms is the dependent variable of the study,
reflecting management ability to achieve profits on the investments that has been
made. Based on previous studies & research that has been done on the subject.
20
The study used the most commonly used accounting based proxies for
performance, which is:

Return on equity.

Return on assets.
Second: Independent variables

Debt ratio, total debt/ total assets.

SIZE, represent by total assets.
Financial Leverage is the independent variable of the study, through the years
financial leverage have been represented by different, such as short term debt,
long term debt, total debt… However, this study used debt ratio (also known as
capital ratio) as a proxy variable of financial leverage, due to its significant
importance for both firms & inventors, as it indicate the relationship between the
proportion of debt and assets.
The second independent variable is size, which is a controlled variable that has
been taken into consideration. Due to it’s direct relationship with financial
leverage, where large firms usually have a high level of leverage meaning that
there is positive relationship between leverage and the size of the firm
21
3.5 Hypothesis:
There are many studies that indicate that that there is a positive relationship
between financial leverage and the performances, such as the study conducted by:
Akhtar, (2012), Subai'i (2012) and many others studies
Based on previous studies, aims and objective of this study the following
hypothesis were developed:
Hypothesis 1. There is positive and significant relation between ROE (Return on
Equity) and D/A (Debt Ratio).
Hypothesis 2. There is positive and significant relation between ROA (Return on
Assets and D/A (Debt Ratio).
22
4.0 Analysis
Using the Eviews software (least squares method) to preform a multiple regression
analysis on cross sectional time series data, with the goal of discovering the nature of
the relationship between the dependent and independent variables. Both equations are
checked separately and results are displayed in table below:
4.1 ROE results:
In first equation ROEit = α + β1(D/Ait ) + β2 (SZit ) + εit …...…………….. (1), the
nature of the relationship between the debt ratio & profitability is checked. In order to
accept or reject the first hypothesis, which is that there, is positive and significant
relationship between ROE and D/E.
Dependent Variable: Y1 (ROE)
Method: Panel Least Squares
Date: 05/07/15 Time: 12:38
Sample: 2011 2012
Periods included: 2
Cross-sections included: 26
Total panel (balanced) observations: 52
Variable
Coefficient
Std. Error
t-Statistic
C
X1
X2
0.087626
0.1905
-7.48E-10
0.031331
0.076762
3.23E-10
R-squared
Adjusted R-squared
S.E. of regression
Sum squared resid
Log likelihood
F-statistic
Prob (F-statistic)
0.144707
0.109797
0.102834
0.51817
46.04128
4.145144
0.021718
Mean dependent var
S.D. dependent var
Akaike info criterion
Schwarz criterion
Hannan-Quinn criter.
Durbin-Watson stat
23
2.796762
2.481695
-2.313911
Prob.
0.0074
0.0166
0.0249
0.1456
0.108992
-1.655434
-1.542862
-1.612276
0.265683
From the above we can indicate that the model is representative of the change
relationship as the probability values is lower than 0.05. As for the other variables
these were the results:
First of all, the intercept of the equation (constant) representing other variables that
affect the change relationship resulted in (C=0.087626). Second of all the coefficient
of the independent variable representing the debt ratio (representing the level of
change in the dependent variables for every unit of change in the independent
variable) resulted in (X1 = 0.1905) meaning that there is a positive relationship. Third
of all, the coefficient of the other controlled independent variable resulted in (X2 = 7.48E-10) meaning that there might a negative relationship between this controlled
independent variable and the dependent variable. In addition, R- squared & the
adjusted R- squared (taking the sample size into consideration) indicate that the model
explains only a small percentage of the variability of the response data, meaning that
the amount of variation in the dependent variables is explained only by low
percentage. Based on the finding presented we can accept the fist hypothesis that
stated a positive relationship.
24
4.2 ROA results:
In the second equation:
ROAit = α + β1(D/Ait ) + β2 (SZit ) + εit ………………..…….. (2)
The nature of the relationship between ROA and debt ratio is checked in order to
accept or reject the hypothesis, stating that: There is positive and significant relation
between ROA and D/E.
Dependent Variable: Y1
Method: Panel Least Squares
Date: 05/07/15 Time: 12:49
Sample: 2011 2012
Periods included: 2
Cross-sections included: 26
Total panel (balanced) observations: 52
Variable
Coefficient
Std. Error
t-Statistic
Prob.
C
0.095053
0.019265
4.933888
0
X1
-0.014848
0.0472
-0.314573
0.7544
X2
-3.36E-10
1.99E-10
-1.689495
0.0975
R-squared
0.075062
Mean dependent var
0.082012
Adjusted R-squared
0.037309
S.D. dependent var
0.064445
S.E. of regression
0.063232
Akaike info criterion
-2.62806
Sum squared resid
0.195914
Schwarz criterion
-2.515488
Log likelihood
71.32956
Hannan-Quinn criter.
-2.584903
F-statistic
1.988264
Durbin-Watson stat
Prob(F-statistic)
0.147829
25
0.123028
The intercept of the equation that represents the other variables that affect the change
relationship resulted in (C=0.095053), the values of R- squared & the adjusted Rsquared the model explains only a very low percentage of the relationship between the
dependent & independent variables being (0.07562) & (0.37309).
However, in this model the values of the probabilities showed that there is no
significant. Thus, the model is not representing of the change relationship between the
dependent and independent variables and it is hard to draw a conclusion based on it.
The reason behind the weakness of the model might be the existing of other random
affecting factors that influence the relationship.
26
5.0 Conclusion & Recommendations
While conducting this research we aimed to draw a conclusion on the impact of
financial leverage on the performance of the Saudi firms, due to its highly importance
contribution in achieving the ultimate goal of the firm. In order to identify the nature
of the relationship between financial leverage & performance the study conducted
statistical applications that will asset in discovering the nature of the relationship
between the dependent & independent variable. Based on the results that was
presented and the model that was used for the multiple regression analysis showed
significance, meaning that the model is dependable, and we can use to predicate that
(ROE) have a positive relationship with financial leverage (D/E). Thus, we accept the
first hypothesis. While the results of the second hypothesis were inconclusive due to
it’s in significant. On the basis of these findings, we concluded that the use of
financial leverage in Saudi firms listed in the Saudi stock exchange might positively
affect the performance, meaning the employing a high level of debt may lead to a
increase in the profitability level of Saudi firms.
In the light of the above findings, it is recommended for financial mangers to consider
increasing the level of financial leverage & fixed cost debt instruments as sources of
funds while forming the capital structure of the Saudi firms. . In order fulfill the goals
of the firms of increasing the level of profitability.
27
Acknowledgment
In the preparation of this study many people have guided me through various stages
of constructing the research. So my deep hearted gratitude go to the faculty of
finance. In particular my supervisor DRr.Jamalalden Falel for his support and
encouragement, and many thanks and special appreciations go to Dr.Mahes for his
help and kind assistance, as well as Dr.Taher & Dr. shaber for their support and
guidance.
28
References
1.
K.V. Sith, op.cit., p.55.
2. Jameel Hasan Al-Najaar, 2013, "The Effect of Financial Leverage on the
performance of firms listed at Palestinian Security Exchange - An Empirical
Study" Alazhar University Journal, Vol. 15, Issue 1, 2013. PP 281-318.
3. Abdallah Barakat, (2012) "Trends in working capital management and its
impacts on firm's profitability and value". Journal of studies and business
research Issue No.2/2012.
4. Alan Kraus and Robert H Litzenberger, (1973) “ A state preference model of
optimal financial leverage” journal of finance vol. 28, issue 4, pages 911-22
5. Ahmed Ibrahim Farhana and colleagues, (1994) “financial structure and
financial leverage and its impact on uses of funds, risk, profitability and cost weighted capital, Arab Institute for Banking and Financial Studies, Amman.
6. Hashemi, Seyed Abbas and Zadeh Fatemeh Zahra Kashani. (2012). The
impact of financial leverage operating cash flow and size of company on the
dividend policy -case study of Iran- interdisciplinary journal of contemporary
research in business, VOL 3, NO. 10.
7. Tally,H.(2014).“An Investigation of affect of financial leverage on firm
financial performance in Saudi Arabia’s Listed Companies” , Victoria
Graduate School of Business, Melbourne, Australia.
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8. Research Journal of Finance and Accounting www.iiste.org ISSN 2222-1697
(Paper) ISSN 2222-2847 (Online) Vol.5, No.1, 2014.
9. Dr. Khalaf Taani .2012 . Impact of Working Capital Management Policy and
Financial Leverage on Financial Performance: Empirical evidence from
Amman Stock Exchange – listed companies, International Journal of
Management Sciences and Business Research, Vol. 1, Issue 8
10. Miller, M., "Debt and Taxes," Journal of Finance 32, May 1977, pp. 261-275.
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Finance “ 22, September 1967, pp. 3956.
30
Appendix
Petrochemical industries
Advanced
Saudi
Petrochemical
Industrial
Company
Investment
Group
ROE
2012
ROA
Total assets
Current liabilities
Non C.L
Other liabilities
DRBT RATIO
ROE
2011
ROA
Total assets
Current liabilities
Non C.L
Other liabilities
DRBT RATIO
16.07
10.08
3,255,166
690,616
521,918
0
0.372495289
25.28
15.17
3,380,081
585,290
766,469
0
0.399919114
2012
Total assets
Current liabilities
Non C.L
Other liabilities
DRBT RATIO
ROE
ROA
2011
Total assets
Current liabilities
Agriculture & food industry
National Gas
and
Industrialization
Co.
12.77
9.35
Saudi
Electricity
Company
4.75
1.07
Almarai
Company
19.08
7.38
Anaam
International
Holding Group
CO
4.19
3.12
1,490,008
198,455
199,774
0
238,586,333
40,712,906
120,529,635
23,374,496
19,518,648
3,679,370
7,668,288
0
299,607
47,917
28,535
0
0.26726635
10.33
7.14
1,488,702
251,765
Retail
Abdullah Al
Alkhaleej
Othaim
Training &
Markets
Education
Company
Company
8.87
13.13
28.4
25.24
18.47
2.05
9.11
26.01
9.74
10.47
26,236,421
4,251,865
2,157,043
1,763,426
644,135
2,051,473
443,589
155,990
941,053
152,501
14,577,747
814,129
0
141,927
112,878
3,537,567
42,944
26,129
0
13,564
0.768656175 0.30590388 0.084429935 0.614134078 0.433050525
8.83
14.57
28.27
28.25
17.06
2.06
9.16
26.04
8.96
9.74
25,668,253
4,446,777
2,123,543
1,675,615
540,879
966,724
508,484
145,658
942,621
151,487
14,728,034
1,104,735
0
201,692
68,858
3,990,729
38,933
22,215
0
11,819
0.766919626 0.371539207 0.079053261 0.682921196 0.429234635
Energy & Utilities
ROE
ROA
Cement
Arabian
The Qassim
Cement Co
Cement Co
0.773795526 0.581375206
4.26
16.96
1.04
7.28
213,448,554
38,974,387
15,653,817
2,818,038
31
0.255174278
8.84
4.9
243,130
73,663
telecom. & info. Tech.
Etihad
Etisalat Co
27.65
15.58
Saudi
Telecom
12.35
6.17
117,904,27
38,623,098
4
10,074,649 25,288,248
7,642,673
7,596,475
0
26,124,199
0.5004816
0.458723482
2
28.78
14.29
13.56
6.94
111,401,78
37,500,676
0
18,046,574 25,263,059
Non C.L
Other liabilities
DRBT RATIO
207,977
0
0.308820704
103,735,878
18,845,211
0.756882504 0.567028796
hotel & tourism
ROE
2012
ROA
Total assets
Current liabilities
Non C.L
Other liabilities
DRBT RATIO
ROE
2011
ROA
Total assets
Current liabilities
ROE
2012
34,673
0
1,065,979
0
0.44558878
multi investment
8,096,750
23,959,617
0.5145288
0.509658893
16
industrial investment
Al Hassan
ALTAYYAR
Dur
Kingdom
Al-Ahsa
Ghazi
TRAVEL
Hospitality
Holding
Development
Ibrahim
GROUP
Company
Company
Co.
Shaker
43.48
11.12
2.51
0.55
29.64
23.25
9.69
1.69
0.47
13.82
3,249,593
2,051,553
41,842,899
563,176
1,357,340
1,476,829
201,155
2,185,520
13,674
650,399
35,342
54,259
11,027,529
65,841
73,863
0
7,083
439,487
0
0
0.46534166 0.127950387 0.326280834 0.141190321 0.533589226
51.96
8.99
2.51
0.03
31.86
27.32
7.82
1.61
0.02
14.87
2,240,041
1,961,671
39,689,890
549,986
1,211,892
1,031,522
179,928
2,424,744
11,533
570,096
30,639
57,723
11,324,968
69,091
76,086
0
17,450
493,881
0
0
0.474170339 0.130042703 0.35887207 0.146592822 0.533200978
buliding & construction
Abdullah A.
National
M. AlGypsum
Khodari Sons
Company
Compan
ROE
2012
ROA
Total assets
Current
liabilities
Non C.L
Other liabilities
DRBT RATIO
ROE
2011
6,058,127
0
17.47
4.99
2,705,546
1,309,945
4.45
3.88
517,441
44,917
real estatet
Arriyadh
Dar Alarkan
Development Real Estate
Co.
Development
Company
14.92
13.33
1,717,670
178,396
622,974
21,189
5,060
0
0
0
0.714428437 0.127755628 0.106805149
23.95
6.54
8.7
32
6.06
4.5
21,980,289
2,362,996
3,305,934
0
0.257909712
6.98
Basic Chemical
Industries Co
13.96
9.18
701,831
105,140
20,871
114,062
0.34206668
13.96
8.59
690,139
118,107
17,653
129,571
0.384460232
transport
Saudi Public The National
Transport
Shipping Co.
Co.
of Saudi
Arabia
5.07
3.5
2,109,762
430,954
9.31
4.56
11,063,609
1,007,168
221,866
4,330,696
0
314,831
0.309428267 0.510926859
4.51
5.68
ROA
Total assets
Current
liabilities
ROE
2012
6.72
2,353,169
1,184,006
5.35
552,976
64,099
509,088
36,047
0
0
0.719495285 0.181103701
7.81
1,667,309
165,507
4.51
24,100,759
5,741,282
4,859
0
0.10218022
2,771,914
0
0.353233523
33
3.39
1,922,828
309,542
2.71
10,623,211
944,248
164,965
4,323,026
0
293,314
0.246775583 0.523437593