Analysis of Profitability: Evidence from IDLC Securities Limited

Abstract

Any firm is considered profitable when it is making money. Profitability occurs when total income within a given time period exceeds total costs. Scale of assets that provide immediate returns is what enables profitability. However, this kind of profitability is inappropriate for sustainability. Every firm ought to have a sound business plan that will enable its continued operations to bring in more money and ultimately avoid failure. One of the key metrics that can be utilized to determine the evaluation of any type of business is profitability. A multiple of yearly cash flows is a superior method for valuing a business since it more accurately captures the net cash flow that a buyer may anticipate. The function that brokerage firms play in the purchasing and selling of financial instruments between buyers and sellers cannot be overstated. Additionally, they provide their clients consulting services. They also contribute to the organization's profitability, which is a key goal for the specific business. Increase the quantity of owner ownership in order to maintain their financial performance, which will make them more resilient to risk and better able to manage it. Knowing the factors that affect profitability and enhancing their position within the company are crucial for achieving the aim. In order to examine their profitability and identify the key factors influencing it, they also offer consulting services to their clients, which helps to eliminate information asymmetries. The number of licensed brokerage companies in Bangladesh is (313). According to the list published on Dhaka Stock Exchange Ltd and Chittagong Stock Exchange Ltd. Dhaka Stock Exchange (DSE) has published best twenty TREC (Trading Right Entitlement Certificate) holders in the outgoing year on basis of highest exchange of shares and mutual funds. Lanka Bangla Securities Ltd has been named best TREC holder as they have exchanged highest volume of shares in DSE trading floor. ICB Securities Trading Company Ltd and BRAC EPL Stock Brokerage became second and third respectively. The other 17 best brokerage houses are- EBL Securities Limited, IDLC Securities Ltd, City Brokerage Limited, UCB Capital Management Limited, MTB Securities Ltd, Sheltech Brokerage Limited, UniCap Securities Limited, Shanta Securities Limited, United Financial Trading Co. Ltd, International Leasing Securities Limited, Bank Asia Securities Limited, AIBL Capital Market Services Ltd, Shahjalal Islami Bank Securities Ltd, BD Finance Securities Ltd,Royal Capital Ltd, BD Sunlife Securities Ltd and Commerce Bank Securities and Investment Ltd. In order to assess the significance of this industry and its effects on the national economy, this study looks at the factors that affected the profitability of IDLC Securities Ltd., one of the major publicly traded brokerage firms, from 2006 to 2022.