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The Relationship between the Investment in Current Assets and Profitability & Liquidity

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  • Anas Ali Al-Qudah
  • Mohammad Abdel Mohsen Al-Afeef

Abstract

This study aims to examine the relationship between the investment in current assets and profitability and liquidity for industrial companies listed in Amman Stock Exchange, the researchers measured the investment in current assets through the ratio of current assets divided by total assets (C.AT.A), profitability measured by return on assets ratio (ROA), and liquidity measured through the Current Ratio (C.R). The researchers found that there is a relationship between investment in current assets & profitability, liquidity in companies listed in Amman stock exchange- industrial sector, and the researchers found that the ratio of (44.1%) of the changes that occur in the Return on Assets (ROA) and Current Ratio (C.R) belonging to the change in investment in current assets. Therefore; researchers recommended industrial companies to follow a moderate policy of investment in current assets. So that the ratio of current assets to fixed assets shall be moderate, reflecting a reasonable degree of risk and acceptable profitability which balanced between risk and return.

Suggested Citation

  • Anas Ali Al-Qudah & Mohammad Abdel Mohsen Al-Afeef, 2015. "The Relationship between the Investment in Current Assets and Profitability & Liquidity," Journal of Finance and Investment Analysis, SCIENPRESS Ltd, vol. 4(4), pages 1-2.
    • Handle: RePEc:spt:fininv:v:4:y:2015:i:4:f:4_4_2
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    Cited by:

    1. Sujan Chandra Paul & Md. Asiqur Rahman & Jiasmin, 2021. "Current Assets, Current Liabilities and Profitability: A Cross Industry Analysis," Journal of Asian Business Strategy, Asian Economic and Social Society, vol. 11(1), pages 55-68, June.
    2. Mohammad Al-Afeef, 2017. "The Impact of Economic Value Added & Return on Investment on the Changes in Stock Market’s Value (Analytical Study: ASE: 2006-2015)," International Journal of Business and Management, Canadian Center of Science and Education, vol. 12(10), pages 132-132, September.

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