Development of financial model using financial ratios in predicting business performance of IBS Construction Company

摘要

The use of financial model is to predict the performance of a company. This paper presents the development of the model for IBS construction companies in predicting the business performance based on historical financial data. The development of the financial model is based on selected financial ratios obtained from the financial statements gathered from thirty (30) IBS companies in Selangor, Malaysia. These financial statements are based on the annual accounting report spanning from 2006 until 2009 obtained from the Companies Commission of Malaysia (CCM). Multiple linear regression analysis is used to fit the selected financial ratios that form the model. The theoretical analysis in the development of model is done using the matrix solution of the Matlab software. The model is then validated with the actual company's business performance to determine the predicting accuracy. IBS Construction Company or any interested parties could use the model to predict their own business performance as additional information for their decision making purposes.