Air Zimbabwe is a national flag carrier of Zimbabwe.

As such it is taken as one of the three Visible

symbols that encapsulate sovereignty and self-determination, along with a national flag And national
anthem (Chattopadhyay, 2015). It is also taken as a grand gesture that asserts The country’s status
symbol. The history of Air Zimbabwe dates back to September 1967 when The airline commenced
operations and was named Air Rhodesia. In 1979 Air Rhodesia was Rebranded to Air Zimbabwe
Rhodesia. However, after independence in 1980 Air Zimbabwe Rhodesia was rebranded to Air
Zimbabwe by introducing national colours (Shoko, 2011). During rebranding in 1980 Air Zimbabwe
introduced Shona and Ndebele for in-flight Announcements in addition to English. Before Independence,
Air Zimbabwe only used English For in-flight announcements. At Independence in 1980, Air Zimbabwe
had 18 aircraft and was A major player on the regional and international scene (Mutambirwa & Turton,
2000). However, Today (in 2017), Air Zimbabwe has 10 aircraft with only four of these in use while the
remaining Six aircraft are on care and maintenance. According to Malaba (2016) Air Zimbabwe has been
In a downward spiral since 2003. Various factors have contributed to the airlines’ financial Woes, key
amongst them, is poor service quality (Steyn & Mhlanga, 2016). Negative media Reports have further
tainted the airlines’ image after it was reported in March 2017 that the Airline was issuing handwritten
boarding passes to passengers. Consequently, this has Damaged the airlines’ image resulting in
passenger numbers dwindling from 1 million in 1999 To less than 20 000 in 2016 (Mhlanga, 2017). In
June 2017, to salvage its battered image, Air Zimbabwe was rebranded to Zimbabwe Airways .The
former Air Zimbabwe logowas removed and replaced by a black tale featuring the Zimbabwe bird and
red Star. It was accompanied by green, yellow, red and black rings near the tail, symbolising the
Country’s flag. Figures 1 and 2 below show the old Air Zimbabwe and the new rebranded Zimbabwe
Airways.

Although there was a logic behind rebranding Air Zimbabwe, particularly after its battered image,There
is a need for the airline to address the root problems identified above. Failure to which Will be
tantamount to addressing the symptoms rather than the root cause of the airlines’ Financial woes.
Therefore, there is a compelling need for the airline to develop value promise After rebranding. A
rebranded Air Zimbabwe needs to rise to its value promise or brand equity If it has to reclaim its market
share lost to competing regional airlines namely, SAA, Ethiopian Airways, Kenya Airways and BA Comair.
For the airline to convince passengers that it has Changed for the better it must first improve its
performance on key parameters like punctuality, Service quality and air fares and should not introduce
points of differences which increase the Air fare of Air Zimbabwe. Once these concerns are addressed,
passengers are likely to stick To the airline. The airline should focus on bridging its ‘points-of-parity’
before enhancing its Points of differences. Re-branding might make all the difference between Air
Zimbabwe and Zimbabwe Airways but it requires a company-wide initiative. The most formidable
challenge For the airline now is to translate the positioning and qualities into tangible or service-
centered Experiences.

Based on the data presented above, the researchers urge the airline to reduce its staff/plane Ratio and
to adopt employee productivity improvement strategies. With a staff-aircraft ratio of
200:1, Air Zimbabwe is clearly oversized. Accordingly, there is a clear case for staff Redundancy.
However, in the process of doing so, there is need to safeguard potential loss of Critical mass of skilled
staff either through voluntary or non-voluntary retrenchment. The airline Can reduce its labour costs
and increase employee productivity by adopting strategies to Schedule reasonable flight hours for flight
crew, reduce cabin crew overtime, dispatch Maintenance staff efficiently during direct working hours,
and encourage employees to provide

Cost-control strategies.

Accusations of mismanagement and corruption have long been associated with Air Zimbabwe, Resulting
in its placement under judicial management in 2012. A forensic audit in 2016 pointed To alleged
fraudulent activity by the airline’s management. Findings released revealed that Between 2009 and
2013, five executives prejudiced the airline to the amount of €5895 695.49 Or not and US$1 298 827.88
each, totalling approximately US$10 million (Chibamu, 2016). The fraud contributed to the financial
problems the airline is facing (Malaba, 2016).The world economic crisis caused and compounded foreign
currency shortages, and the lack Of fuel increased the operational difficulties of Air Zimbabwe.
Therefore, Air Zimbabwe’s

Financial problems were also attributed to the volatile economic environment which was Characterised
by the shortage of foreign currency as well as hyperinflation which was above 100% in 2010 (Zhou,
2012).Furthermore, Air Zimbabwe aircraft are often used as private ambulances for Robert Mugabe And
his family’s medical trips overseas (News Day, 2014). In state carriers political processes Supersede
airline operating interests in a market of substantial government influence (government airline or
monopolistic market) (Chattopadhyay, 2015). A volatile political Environment in Zimbabwe was the
cause of dwindling tourist arrivals to Zimbabwe, which has Significantly affected the load factors for the
national carrier (Bhebhe, 2016). Consequently, Political interference has significantly affected the
performance of airlines (Mananavire, 2016).Not using new technology is also affecting Air Zimbabwe’s
financial performance. According To Ndlovu (2016), Air Zimbabwe is operating with old and outdated
technology in comparisonTo other airlines. Its equipment is so old and unattractive that customers
doubt the safety of The aircraft, leading to them board other aircraft and to shun Air Zimbabwe. Lack of
Implementation of new technology is due to their inability to meet the costs of procuring the

Technology. This lack of adaptation to new technology has caused the airline to be

Uncompetitive in the market (New Zimbabwe, 2016). As a result, in May 2017 the European

Commission (EC) banned Air Zimbabwe from its airspace (its most lucrative route) over safety

Concerns due to its aged aircraft (eNCA, 2017). Air Zimbabwe also faces intense rivalry after

The Zimbabwean government opened the skies. According to Chipunza (2013), three South

African airlines, namely SAA, Comair and Airlink, now control over 90% of the market share

On the Harare to Johannesburg, Johannesburg to Victoria Falls and Johannesburg to

Bulawayo routes, against Air Zimbabwe’s 10% and this has significantly affected Air
Zimbabwe’s performance.

Cost management often refers to cost cutting and it’s commonly approached that firm managers

Use to respond to the decreasing sustainable profitability (Anderson, 2007). The most important
Managerial tools are cost management strategies (Zengin and Ada, 2010), and cost management

Strategies are considered as critical factors to increase revenue for the success of Companies (Kumar
and Shafabi, 2011). Cost management strategy supports decision making and improves competitive
advantage that Results in a better resource allocation (Ellram and Stanley, 2008). In addition, cost
management May be an integral feature of overall businesses’ management effectiveness and facilitate
to Determine accurately estimated cost before process starting and can help to forecast cost Occurrence
in the future. Cost management strategy effectiveness helps to finish the task with the Spending of
limited allocated resources and makes valuable to firms such as working capital Invested reduction,
lower cost per unit, and better quality of the process and product (Groth and Kinney, 1994.

Limited resource and apparent continuous competition influence firms to better managing cost of
Production by implementing standard costing, budget system, monitoring cost information, andFocusing
on value added activities by eliminating non-value added activities through supplier Coordination, and
emphasizing on cost structure by analyzing cost and finding the way to reduce Costs in the stage of pre-
production. Firms with cost management strategy implementation are Able to know when the amount
of cost will incur in the future if they have current and future cost Information. Thus, managers can
make better decision which will positively improve the Financial performance of firms.

Five independent variables (Management accounting systems) have been used in an attempt

To explain the variance in performance. These five variables are budgeting and planning,

Controlling and reporting, performance evaluation system, decision making system, costing System.

Disclaimer of Opinion (2014)

Because of the significance of the matters described in the Basis for Disclaimer of Opinion Section of my
report, I have not been able to obtain sufficient appropriate audit evidence to Provide a basis for an
audit opinion. Accordingly, I do not express an opinion on the financial Statements.

Basis for Disclaimer of Opinion (2014)

Breakdown in internal controls

There was a breakdown in internal controls in the 2009, 2010, 2011, 2012 and 2013 financial Years. As a
result, I was unable to obtain sufficient appropriate audit evidence that the 2014 Opening balances do
not contain misstatements that may materially affect the reported financial Performance and cash flows
for the current year. The breakdown in internal controls continued In the current year and, accordingly, I
was unable to obtain sufficient appropriate audit evidence That the financial statements are not
materially misstated.

Existence, completeness and valuation of inventory

The Auditor contracted did not observe the inventory count at year end as he was appointed Auditor
after year end. As a result, I was unable to determine whether any adjustments might Have been
necessary in respect of recorded or unrecorded inventories. International Accounting Standard 2,
Inventories requires inventory to be measured at the lower of cost or net realizable Value. Due to the
absence of perpetual inventory records and purchase invoices, the pricing test Could not be performed
to ensure that inventory was carried at the lower of cost or net realizable Value. I was thus unable to
satisfy myself as to the existence, completeness and valuation of the Inventories which are stated in the
statement of financial position at US$10,126,151.

Unaccounted for MA60 aircraft

The company was using and deriving economic benefits from three MA60 aircraft, which were Not
accounted for in the company’s financial statements. There was neither a lease agreement

Completeness of trade and other payables

Included in trade and other payables is US$26,657,397 for which I could not obtain Confirmations nor
supplier statements. In addition, explanations for a variance of US$87,276,545 between ledger and
amounts confirmed by creditors were not provided. Leave Pay provision amounting to US$1,424,921 has
been static since 2010 due to non-accrual of Employees’ leave days by the company. The effect of the
non-accrual has not been determined.I was therefore unable to satisfy myself on the completeness and
accuracy of trade and other Payables.

Existence of trade and other receivables

Included in trade and other receivables is US$12,838,394 for which no confirmations or Evidence of
subsequent receipts could be obtained. I was therefore unable to satisfy myself on The existence and
valuation of trade and other receivables.

Unsupported expenditure

Included in operating costs are expenses amounting to US$1,773,732 which had no supporting
Documents. I could therefore not verify the existence and accuracy of the expenses.

Non-depreciation of, absence of supporting documents for additions to and asset

Register for property, aircraft and equipment I was not availed a register for ancillaries and rotables with
a cost of US$14,740,363 and Supporting documents for additions to ancillaries and rotables amounting
to US$110,723. The Ancillaries and rotables were not depreciated during the year as required by IAS 16.
I could

Bank and cash

I was not availed petty cash certificates or disbursement vouchers to prove existence or use of
Petty cash amounting to US$654,587 at the various Air Zimbabwe outstations. The Company Also had
negative petty cash balances amounting to US$720,214 accounted for under trade Payables which could
not be substantiated. I could not obtain confirmations for bank overdraft And other bank balances
amounting to US$3,539,819 and US$725,629 respectively. No Alternative procedures could be
performed to gain sufficient assurance on existence and Completeness of bank and cash balances.

Suspense account

Included in the Statement of Financial Position under current liabilities is an unexplained Suspense
balance amounting to US$27,965,576. There were no alternative procedures which I Could perform to
validate this balance.

Non-compliance with International Financial Reporting Standards (IFRSs) The Company did not comply
with the standards mentioned below in the preparation of these Financial statements.

IAS 16 Property, Aircraft and Equipment

The standard requires each part of property, aircraft and equipment with a cost that is significant In
relation to the total cost of the item to be depreciated separately. Depreciation for each Component of
items of property, aircraft and equipment with a cost that is significant in relation To the total cost of
the item, has not been separately calculated nor have the residual values and Useful lives of such assets
been reassessed at year end. As per IAS 16, land and buildings are separable assets and should be
accounted for separately, Even when they are acquired together. The entity did not separate land and
buildings which is Contrary to the requirement of the standard.

IAS 36 Impairment of assets ) Bank and cash

I was not availed petty cash certificates or disbursement vouchers to prove existence or use of Petty
cash amounting to US$654,587 at the various Air Zimbabwe outstations. The Company Also had
negative petty cash balances amounting to US$720,214 accounted for under trade Payables which could
not be substantiated. I could not obtain confirmations for bank overdraft And other bank balances
amounting to US$3,539,819 and US$725,629 respectively. No Alternative procedures could be
performed to gain sufficient assurance on existence and Completeness of bank and cash balances.

Suspense account

Included in the Statement of Financial Position under current liabilities is an unexplained Suspense
balance amounting to US$27,965,576. There were no alternative procedures which I Could perform to
validate this balance.

Non-compliance with International Financial Reporting Standards (IFRSs) The Company did not comply
with the standards mentioned below in the preparation of these Financial statements

According auditors general report 2018-2019 PROCUREMENT ISSUES

3.1 Payments in ledger but not on supplier statements

Finding

There were payments dating back to 2011 that Air Zimbabwe claims to have made to various Suppliers
but have not yet been acknowledged by suppliers. The payments were made either Through cash or
bank transfers. The following are such examples;

Supplier Total payments $

1. 129,773
2. 46,600
3. 720,910
4. 64,028
5. 330,000
6. 403,226
7. 29,766
8. 194,565

Risk / Implication

Fictious payments may be debited to suppliers’ accounts to cover up misappropriation of

funds.Management response Observation is noted. However most payments not reflecting on the
creditors’ statement Have already been cleared by the suppliers. The Airline is currently in the process
of Obtaining detailed ledgers from the suppliers to enable clearance of the outstanding Payments.

EMPLOYMEMENT COSTS

Statutory deductions and other obligations

Finding

The Company had not been paying statutory and other deductions. As at 31 December 2014, The
company had a cumulative obligation of US$27,285,786 relating to National Social Security The
researcher made the following assumptions before conducting the research:The revenue of Pathfinder
would keep decreasing and costs rising; The cost management system would not be revised during the
course of the researcher`s study; The company`s management structure would not be
restructured.uthority (NSSA), Pay as you earn (PAYE), ZIMDEF, Pension, National Employment Council
And Medical Aid.

Risk / Implication
Financial loss due to fines and interest for non-remittance. Employees may fail to access essential
services.

Recommendation

Statutory and other obligations should be paid up on time.

Management response

Cash flow constraints caused the late remittances or failure to remit the funds. Following Reconstruction
of the Airline on October 04, 2018, all statutory obligations are being Settled.

Payroll reconciliations

Finding

The Airline was not reconciling its payroll to the accounting records. There was an unexplained Variance
of US$478,973 between total payroll costs of US$14,155,906 per accounting records And the payroll
amount of US$13,676,934. I could therefore not satisfy myself regarding the Accuracy and validity of
payroll costs.

Risk / Implication

Fraud and errors may go undetected.

Recommendation

Payroll reconciliation should be prepared, reviewed and approved on a monthly basis.

Main Research Question

How cost management enhance the financial performance of Air zimbabwe

Sub-research Questions

What is the practice of management accounting system at air zimbabwe

Is there a relationship between cost management and financial performance in an organization?

What are the challenges faced by management in cost management at Air Zimbabwe

What strategies or measures can be implemented to improve the financial performance of

Air Zimbabwe through cost management

Value of the Study

The study will also benefit scholars and academicians interested in

Pursuing a study in accounting and especially management accounting as it will form a Foundation for
other studiesThis study will have useful implications for theory and practice. Regarding the potential
Implications for theory, the study will expand the existing management accounting the study will
provide new empirical evidence on the Use o8f MAPs.the research will test for a relationship between
the use of MAPs and the

Performance ofcompanies The focus on Malaysia is especially

Benefits for practice will include the following: the creation of an awareness among companies of the
importance of Management accounting as a means of improving performance and maintaining
Competitiveness in the marketplace. the provision of results that may assist policymakers, such as the
nolevel of use of MAPs among SMEs and factors that affect the use of MAPs, that may ensure that
Future policy decisions made by the Malaysian government, financial institutions, And other groups with
an interest.

To the University

The research is done in partial fulfillment of the requirements of Bachelor of science Honors Degree in
Accounting. The aim of the study is also for it to be used by the institution in as a guide in future
researches on the same field of the study as it adds to the existing body of knowledge.

Assumptions Respondents will give truthful responses that will facilitate reasonable inferences and
deduction

There are no fundamental changes to the core business activities and management structure at air
zimbabwe

Limitations of the study

Firstly, the company’s directors might hold onto some information they will perceive confidential.

Respondents to questionnaires may take too long to respond due to busy work schedules and this may
lead t the budget being blown

Funds are the major limiting factor in the completion of the project. The researcher will try his

Best to find the least cost methods of research without compromising the quality of the research.

One of the methods is of using by use of emails to contact the intended person with the

Information required than to travel to a particular location.

To the researcher

The researcher will benefit from the research by having a better understanding of the concept of Total
Quality Management and the impact that it has to all the elements that makes it a complete system. The
research will also enable the researcher to make valid conclusions and recommendations on matters
concerning the area of study to relevant parties of concern with the results.
The researcher made the following assumptions before conducting the research:

The cost management system would not be revised during the course of the researcher`s Study;

The findings of this study can be of importance in addressing the impact of Costs reduction techniques
in the creation of sustained profits in the Tourism Industry if implemented

The research will be carried out and be completed within the time limits (3 Months).

Outcomes of the research are going to assist Rainbow Tourism Group and it

Will act as a reference for future researches by other scholars

1.5 JUSTIFICATION OF STUDY

Air Zimbabwe, as the country’s flag carrier and the sole registered airline in Zimbabwe, does not only
play an ambassadorial role for the country but also is a significant driver for the tourism, farming and
industrial sectors. Its faltering performance as a result of the company operating costs outweighing
revenue is a major area of concern since it is the key area which contributed to the slump of the airline
and the above mentioned sectors of the economy will benefit from the revived operations of the airline
after this problem has been rectified.

This study will help the airline to identify its areas of weaknesses and they will be able to match their
revenue to their expenditure because an airline can not actually profiteer but at least cover its fixed
costs and the other sectors of the economy like tourism will benefit more from its operations.

The delimitation of the study is that the research is limited to the profitability of Cafca Ltd only from 31
March 2011 to 31 March 2013 and it is only confined in Harare.

. It also dealt with the management of costs and the costing system;Information being collected from 29
employees who were interviewed and asked to fill in

The study is prepared in partial fulfillment of the Bachelor of Commerce Honors Degree in Accounting at
Midlands State University. The research allows the researcher to increase some research skills for
further Research studies forthcoming.The research will act as a future reference for other academics
who anticipate Carrying out research on the subject.The findings and references in this study can be of
useful to the company if They are executed
Literature review

5.2. Defining Management Accounting

Management accounting is the production of very long experiences and techniques of the businesses
And managers of the organization that are used information especially financial information about their
Firms for decision making that provided them a competitive edge to the firms (Ashfaq, Younas, Usman&
Hanif, 2014). Talha, Raja, and Seetharaman (2010) elucidates that management accounting is a Process
of providing financial and non -financial information for managers. Management accounting Is the
science that narrates the supply of suitable financial and non- financial data to make decisions, Plan,
control and evaluate the performance of any aspiring successful organisation (Botes,
2009).Management accounting is one of the key instruments for decision making at any level of the
Organisation (Mayanga, 2010). In addition, management accounting is a vital tool for effective Business
management as it provides appropriate information to managers for decision making Regarding the
success of the organisation (Stefanou & Athanasaki, 2012). Furthermore, Drury (2015) Elucidates that
management accounting is concerned with the provision of information to people with The organization
to help them make better decision and improve the efficiency and effectiveness of Existing operations.
Moreover, the main focus of management accounting is to improve the Organization performance and
profitability and assist managers by providing relevant financial and Non-financial information for
making decisions (Ghorbel, 2016). From the various defenitions, it can Be concluded that managerial
accounting is concerned with providing information to managers, that is, To those who are inside an
organization and who direct as well as control its operations

5.3. Management Accounting Practices

According to Ndwiga (2011) management accounting practices are associated with providing
Management solutions for the internal management purposes. Epstein and Lee, (2008) as well asNuhu,
Baird and Appuhami, (2016) are of the view that management accounting practices are Organizational
information systems that provide an organization with relevant information to add value To its
customers and organisations. Management accounting practices facilitates effective decisions And assist
organisations in promoting intended behaviours (Axelsson, Laage-Hellman & Nilsson,2002, p. 53).
Management accounting practices can include budgeting, performance evaluation, Information for
decision-making and strategic analyses, among many others (Gichaaga, 2013).

Costing

Research indicates that the information on product costs generated by costing systems has A wide
number of uses. It includes pricing decisions; cost control (Yoshikawa et al 1989;

Van Triest and Elshahat, 2007); an evaluation of production processes; and transfer pricing (Yoshikawa
et al 1989). The two main costing methods adopted were absorption costing

And direct (variable) costing in previous researches. Absorption costing system is general Preferred
globally (Drury et al. 1993, Scherrer, 1996), Shields et al. 1991). Joshi (2001) Reported half of Indian
firms adopted this technique and Firth (1996) revealed 66% of Chinese

Foreign-based companies applied this technique. Likewise, the use of direct (variable) costing
Is also widespread. Similarly, Abdel-Kader and Luther (2006) indicated just over 50% of

British firms implemented this technique. In contrast, in developing countries, Firth (1996)

Reported an adoption rate of 76 % by locally based Chinese companies in China. Contrary to

The results in European countries and developing countries, U.S and Australia, results reveal

A much higher uptake of Activity Based Costing systems.

Budgeting

Budgeting is perceived as an important control system in almost all organizations (Hansen

And Van der Stede, 2004). The main focus on budgeting has been on uptake rates and the

Purposes underlying its use.Previous research indicates that the main purposes of budgeting

Are planning future performance; planning the future financial position; planning future cash

Flows; planning future day to day operations; and controlling costs (Chenhall and LangfieldSmith, 1998;
Abdel-Kader and Luther, 2006).

Decision Making

Wu et al. (2010), hold that effective decision making is the most important key factor in

Today‘s rapid and changing competitive environment. The decision support analysis can be

Divided into short term and long term analysis. Abdel-Kader and Luther (2006) argued that for

Regular or short-term decisions management accountants can use cost-volume-profit (CVP)

Analysis, product profitability analysis, customer profitability analysis, and stock control

Models. For longer-term capital investment decisions management accountants can produce

And review accounting rates of return and payback periods as well as complex signals based

On discounted cash flow. Capital budgeting techniques capture both non-discounted and

Discounted approaches. Drury et al. (1991) argued that the superiority of internal rate of

Return (IRR) and net present value (NPV) analysis has been repeatedly demonstrated under

Conditions of certainty
2.4 Determinants of Financial Performance

Salter (1995) suggested that performance measurement of corporate and business unit has three

Dimensions: (1) effectiveness, (2) efficiency, and (3) adaptability. Some indicators of three

Dimensions are returns on investment, sales growth, and new product success, respectively.

Furthermore, Salter (1995) argued that relative performance measures appropriate surrogates for

Objective measures in the single-industry sample. Morgan (2012) suggested that business

Performance consists of two aspects: market performance and financial performance. Market

Performance relates to customer behaviors. Higher sales volume, customer satisfaction increases,

Customer loyalty, and growth of market shares are indicators of market performance while the

Financial performance is measured in accounting terms. This study defines firm performance as a

Goal achievement and financial performance that are indicated by the net income goal

Achievement, sales amount and market share increases, the better return on investment, and the

Growth and continuance of overall performance (Chai-Amonphaisal and Ussahwanitchakit, 2010;

Tantiset and Ussahwanitchakit, 2010).

Business operation focus on highest potential profit and a common approach is a cost control that
Is expected to produce the greatest overall financial performance (Healthcare Financial

Management Association, 2012). Cost management strategy implementation success might

Generate value to the firm, for example, the greater control production activities results in better

Quality of procedure and lowers the unit cost of goods and cost variance. In addition, the

Consequence of the cost management success is firm value increasing and profit improvement

That positively affects firms’ value greater than pricing (Groth and Kinney, 1994). Therefore, it

Can be expected that cost management implementation will increase firm performance.

Financial performance measures are intended to evaluate the effectiveness and efficiency by

Which manufacturing companies use financial and physical capital to create value for

Shareholders. The key recommended measures for financial analysis include: profitability,

Liquidity and solvency (Zenion et al.1999). Profitability measures the extent to which a business

Generates a profit from the factors of production: labor, management and capital. Profitability is

Also used as a general measure of a firm’s overall financial health over a given period of time,

And can be used to compare similar firms across the same industry or to compare industries or

Sectors in aggregation (Copisarow, 2000). Four useful profitability ratios and measures are the
Return on assets (ROA), return on equity (ROE), operating profit margin and net income. The

ROA measures the returns to all assets and is often used as an overall index profitability and the

Higher the value, the more profitable the business. ROE measures the rate of return on the owners

Equity employed in the business. It is useful to consider ROE in relation to ROA to determine if

The firm is making profitable returns on their borrowed money. Operating profit margin

Measures the returns to capital per unit of gross revenue. Net income comes directly off the

Income statement and is calculated by matching revenues with the expenses incurred to create

Those revenues, plus the gain or loss on the sale of capital assets (Zenios et al. 1999).

Liquidity measures the ability of the business to meet its financial obligations as they come due,

Without disrupting the normal, ongoing operations of the business. It is measured by Current

Ratio which is current assets over current liabilities.

Solvency measures provide an indication of the business ability to repay all its debts if all of the

Assets were sold. It is measured using Debt to Asset ratio, Equity to Assets ratio and Debt to

Equity ratio. In our study whatsoever we are going to focus on profitability.