Course: Advanced Corporate Finance
In this research paper, you are acting as an investor and you should create your OWN portfolio. As an investor, before buying a company you should have criteria. (For example, some investors buy those companies, those paid out ratios is more than 50%. It is criteria for them. Just example).
Before beginning to download data, you should choose different countries. Then you download the ratios for all companies in these countries. In the next stage, you should choose companies, those certain ratios is more than certain criteria. Then you download ratios again for the next year and rebalance your portfolio. (which means that, if there are firms whose ratios is less than certain criteria, you sell them and put remaining companies into your portfolio.) As an investor, you should concentrate on Islamic countries.
In this research, you should use only three ratios: Inventory turnover, accounts receivables and account payables. (Note: Inventory turnover ratio is the most important parameter to judge the performance of the industry. When you combine these 3 ratios, they create another ratio which is called the Cash Conversion Cycle. So be sure that these ratios are closely related to each other.
Why to concentrate to Islamic firms?
Islamic firms are firms with low debt ratio, low cash and accounts receivables. Research is highly demanded.
In this research, you should first to develop hypothesis and then run the test. Before running the test, you should have a broad idea.