The effect of financial performance and capital structure towards firm's - Evidence from difensive companies at Malaysia stock exchange

Financial analysis seeks to identify a value of firm whereby the ratio being used as a benchmark to evaluate the company's past, present, for future financial performance planning and any condition for decision making (Aimling, 1978).Therefore, in this study the Price to book value ratio (PBV) being used as indicators for firm value. PBV was a valuation ratio which always being used to attracts the attention of investor and fund manager in order to compare a firm's market value. A stock with a price book value less than one (1) meant the stock was undervalued. Well, the stock with high price to book value indicates either the stock was overvalued or investors are optimistic about the future growth potential of the stock. Sometime it may provide a wonderful buying opportunity and indicate that something wrong with the fundamentals of the firm. Moreover, this study was using the sample of Malaysia Defensive firm; defensive was synonymous to non-cyclical stock or companies whose business performance and sale are not highly correlated with the larger economic cycle. In another words, Defensive firm business was not highly dependent on economic prosperity. Thus means, whenever the economy was growing or shrinking, demand for the offering of a defensive firm will usually remain consistent. This stability could attract for investment because of the reassurance that the value of any investment were likely to be maintained. The last but not least, this study also used or takes the most recent year data which was five (5) year sample of data from each defensive firm in Malaysia, starting from 2012 until 2016.