FINANCIAL RATIOS AND PORTFOLIO CONSTRUCTION

This paper aims to provide empirical evidence of portfolio construction using the current, return on equity, and debt-to-equity ratio across the top three industries in Malaysia. This study analysed 30 companies listed on Bursa Malaysia from three different industries: the energy industry, the plantation industry, and the consumer products and services industry. We find that all 17 portfolios generate positive returns except Portfolio 12. There is no statistically significant difference between the mean of the portfolio with the highest ratios and the mean of the portfolio with the lowest ratios for the three financial ratios. The results of the study provide valuable insight for portfolio managers and investors.