Impact of Working Capital Management Policy and Financial Leverage on Financial Performance: Empirical evidence from Amman Stock Exchange – listed companies

Author(s)

Dr. Khalaf Taani ,

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Volume 1 - August 2012 (08)

Abstract

This paper aims to determine the impact of working capital management policy and financial leverage on financial performance of Jordanian companies measured in terms of net income, return on equity (ROE) and return on asset (ROA). Pearson's rank correlation test, ANOVA F- test, and multiple regression analysis were used on 45 companies included in the industrial sector in Jordan ranked in terms of gross revenues. Results of the study indicated that firm's working capital management policy, financial leverage, and firm size have significant relation to net income. However working capital management policy has no significant impact on return on equity (ROE) and return on assets (ROA). 

Keywords

Working capital management, financial leverage, financial performance, Amman Stock Exchange, Return on Asset, Return on Equity.

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