Authors : Mohd Suberi Ab. Halim, Arman Hadi Abdul Manaf, Abdullah Osman and Muhammad Safizal Abdullah
Abstract: The study aims to assess the burden of debt incurred by construction firms. Several methods of data collection were utilized in this study. Method engages ratio analysis on the financial statements of selected contractors (six large and medium-sized contractors). Annual financial reports for 3 consecutive years (2007, 2008, 2009) of selected construction companies were thoroughly studied. Four types of debt ratios, namely; current liabilities/net asset value, debt/equity ratio, average age of account payable and ratio of accounts payable/income were used to measure the burden of debt incurred by contractors. In this comparative analysis, industry averages were also used to evaluate companies’ average ratios. In method, interviews with owners of the firms were conducted. The step verifies the findings from the ratio analyses. Method undertook quantitative surveyto assess the perception on the findings of methods and. The study mailed 250 questionnaires to others of the same category of contractor firms. The analyses indicate that most contractors faced with high debt burden and results from the interview indicate that the situation is caused by eight factors: late reception of progress payment, small initial capital, late reception of advance payment, insufficient advance payment, portions of firm capital in the form of fixed assets the attitude of contractors towards debt, value of projects exceeding the capacity of a firm and insufficient capitaldue to firm expansion. From the survey, factors are significantly positive however factors and were insignificant.
Mohd Suberi Ab. Halim, Arman Hadi Abdul Manaf, Abdullah Osman and Muhammad Safizal Abdullah, 2016. Debt Crisis Among Bumiputera (Malay) Entrepreneurs in Malaysian Construction Industry. International Business Management, 10: 506-511.