The Effect of Discretionary Cash Flow on Profitability Ratios: Evidence from Jordanian Manufacturing Corporations

Authors

Mohammad Salim Elessa, Department of Accounting and Accounting Information System, Amman University College, Al-Balqa Applied University, Amman, JordanFollow
Ayman Mohammad AL Shanti, Department of Accounting and Accounting Information System, Amman University College, Al-Balqa Applied University, Amman, JordanFollow
Mohammad Mahmoud Humeedat, Department of Accounting and Accounting Information System, Amman University College, Al-Balqa Applied University, Amman, JordanFollow
Sulaiman Raji Weshah, Department of Accounting and Accounting Information System, Amman University College, Al-Balqa Applied University, Amman, JordanFollow

Abstract

This study examines the effect of discretionary cash flow on the profitability ratios of the manufacturing corporations listed on the Amman Stock Exchange. The study relied on primary data collected from Jordanian manufacturing corporation reports for the period 2010-2021, based on a stratified sample of twenty manufacturing corporations listed on the Amman Stock Exchange (ASE). Regression analysis and numerous relevant statistical tests were used to assess the hypotheses. Profitability ratios as the dependent variable were assessed by return on investments (ROI), return on equity (ROE), and net profit margin (NPM), while discretionary cash flow was the independent variable. Furthermore, the study found that discretionary cash flows have a significant impact on return on investments (ROI), return on equity (ROE), and net profit margin (NPM). The researchers recommend that further research consider other measurements of profitability ratios.

Recommended Citation

Salim Elessa, Mohammad; Mohammad AL Shanti, Ayman; Mahmoud Humeedat, Mohammad; and Raji Weshah, Sulaiman (2023) "The Effect of Discretionary Cash Flow on Profitability Ratios: Evidence from Jordanian Manufacturing Corporations," Information Sciences Letters: Vol. 12 : Iss. 5 , PP -.
Available at: https://digitalcommons.aaru.edu.jo/isl/vol12/iss5/3