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- Title
EFFECTS OF FINANCIALAND MACROECONOMIC FACTORS ON THE FINANCIAL PERFORMANCE OF A COMPANY.
- Authors
Hassan, Morsheda; Nassar, Raja
- Abstract
In this study, we investigated the relationships between financial performance of a company (as measured by return on assets (ROA)) and its financial ratios as well as macroeconomic variables that impact the national economy. The financial ratios used were debt-to-equity ratio (DER), free cash flow per share (FCFSH), price-to-book ratio (PB), and current ratio (CR). The macroeconomic variables were inflation (CPI), unemployment rate (Unempl), GDP, and bond rate (Bond). The data considered were over the period 2005 to 2019 for the companies listed on the Dow Jones Industrial Average. Results showed that GDP and DER were major contributors to financial performance. GDP had a positive relationship with the financial performance of a company and DER had a negative relationship. DER can be viewed as a key indicator of a firm’s financial performance.
- Subjects
FINANCIAL performance; FINANCIAL ratios; DOW Jones industrial average; ORGANIZATIONAL performance; RETURN on assets; FREE cash flow; DEBT-to-equity ratio; UNEMPLOYMENT statistics; CONSUMER price indexes
- Publication
Journal of International Business Disciplines, 2023, Vol 18, Issue 2, p19
- ISSN
1934-1814
- Publication type
Article