Financial Analysis of the Brokerage Sector
Chapter from the book:
Financial Analysis Applications in Borsa Istanbul: Sector-Based Reviews I.
Brokerage houses are indispensable constituents of financial markets in terms of their functionality. In this chapter listed brokerage firms in Türkiye are investigated through financial analysis. The sample makes 35%, 22% and 40% of assets, trading volume and sales revenues of the whole sector on average, respectively in the covered period, 2018-2022. All firms in the sample are broadly authorized and well-established brokerage houses. Compared to the overall sector, higher leverage, high total assets and equity turnover ratios and lower sales-based profitability ratios are among the typical features of the sample. The financial ratios of the sample firms have high variation in time. This finding is attributed to the sensitivity of the sector, which heavily intermediates trading in stock markets, to markets’ volatility. Hence, the significance of market risk has further elevated with the soaring markets in recent years. The clearer negative impact of leverage on liquidity as revealed through cash ratio signifies the importance of receivables management. Debt management and turnover ratios are found to be the leading metrics with respect to their effects on financial performance. This finding is more meaningful for the sector’s big players like İş Yatırım. The increased trading volumes due to rising markets call for effectiveness in both debt and asset/equity management while increased revenues lead to increases in monetary profits per scale. On the other hand, Osmanlı Yatırım emerges as a benchmark, specifically in the last 3 years of analysis, for relatively small-sized in-sample and out-of-sample brokerage houses in terms of profitability. Sustainable growth requires profit targets down to the netted one commencing with the gross profit. Effective cost management should not be undervalued either, for the resultant internal fund accumulation.
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Copyright (c) 2023 Yunus Kılıç, Mehmet Fatih Buğan, Ali Bayrakdaroğlu; Yunus Kılıç, Mehmet Fatih Buğan, Serdar Yaman, Turhan Korkmaz, Kemal Faruk Yazgan, Şakir Sakarya, Yusuf Tepeli, Ali Bayrakdaroğlu, Haşim Bağcı, Yunus Emre Kahraman, Emre Arslan, Salih Aydın, Ahmet Çakmak, Yaşar Şahin, Ali Ulvi Özgül, Ayşegül Ciğer, Bülent Kınay