European Journal of Scientific Research - EuroJournals

U.S. and Japanese Electronic and Electrical Equipment Manufacturing Firms: A Comparison 300
Table 2: Multivariate Analysis of Variance (MANOVA)
Financial Ratios
Means and Standard Deviations1 Univariate Statistics
United States Japan F-value P-value
Liquidity
Current Ratio
4.735
(4.287)
2.342
(1.756)
37.826* 0.000
Quick Ratio
Turnover
3.492
(3.749)
1.767
(1.566)
25.580* 0.000
Inventory Turnover
8.493
(5.900)
6.430
(4.994)
11.184* 0.001
Total Assets Turnover
Financial Leverage
0.890
(0.375)
1.015
(0.400)
8.465* 0.004
Equity Ratio
Profitability
67.70%
(17.70%)
50.00%
(21.50%)
67.747* 0.000
Net Profit Margin
2.60%
(12.30%)
2.70%
(4.60%)
0.010 0.919
Return on Assets
2.10%
(8.30%)
2.40%
(3.50%)
0.120 0.729
Return on Equity
4.50%
(7.90%)
4.20%
(6.90%)
0.176 0.675
Multivariate Statistics: 16.115* 0.000
1
The figures in parentheses are the standard deviations.
*Significant at the one-percent level.
Both results are significant at the one-percent level. Although ITR is significantly higher in the
U.S., TAT is significantly higher in Japan. It implies that the turnover of non-inventory assets, such as
accounts receivable, and fixed assets, may not be sufficiently high in U.S. firms compared with
Japanese firms. Therefore, to improve their TAT, U.S. firms should try to improve their accounts
receivable and fixed asset turnovers by managing these assets more efficiently.
The Equity Ratio (EQR) is significantly higher in the U.S. than in Japan at the one-percent
level. It indicates that financial leverage (debt ratio) is significantly higher in Japan than in the U.S.
The high level of financial leverage indicates a high level of financial (bankruptcy) risk. This result
implies that financial (bankruptcy) risk is higher in Japanese firms than in U.S. firms.
In terms of the profitability ratios, there appears to be no significant differences between the
two countries. The mean Net Profit Margin (NPM) and Return on Assets (ROA) ratios are slightly
higher in Japan than in the U.S. However, the mean Return on Equity (ROE) ratio is slightly higher in
the U.S. than in Japan. The standard deviations of the U.S. profitability ratios are considerably larger
compared with the Japanese profitability ratios. It indicates the presence of a wider spectrum of firms
in the U.S. sample, compared with the Japanese sample, with very high positive and very high negative
profitability ratios. The Japanese profitability ratios appear to be more closely clustered around the
mean value.
The U.S. mean ROE ratio is slightly higher than the Japanese mean ROE ratio. Since we also
concluded above that Japanese firms have a higher liquidity risk and financial (bankruptcy) risk
compared with U.S. firms, this result implies that U.S. common equity securities are likely to have
more favorable market valuation compared with Japanese common equity securities.
4. Summary and Conclusions
In this study, we have compared the financial characteristics of U.S. and Japanese electronic and
electrical equipment manufacturing firms with the Multivariate Analysis of Variance (MANOVA)