The Impact of Current Ratio on Net Profit Margin (Case Study: Based on Jordanian Banks)
Lecturer, Accounting Department, Faculty of Business, Applied Science Private University, MEU Research Unit, Middle East University, Amman, Jordan,
Munir Al-Haki
Associate Professor, Banking and Finance Department, Faculty of Administrative & Financial Sciences,Petra university, Amman, Jordan,
Mohammad Dweiri
Assistant Professor, Department of Business Administration, Faculty of Business, Al-Zaytoonah University of Jordan, Amman, Jordan
Majed Qabajeh
Assistant professor, Accounting Department, Faculty of Business, Applied Science Private University, MEU Research Unit, Middle East University, Amman, Jordan
Dmaithan almajali
Associate professor, Department of Management information system, Faculty of Business, Applied Science Private University, MEU Research Unit, Middle East University, Amman, Jordan
Ahmad Bani Ahmad
Associate professor , Department of Finance and accounting science , Faculty of Business, Middle East University, Applied Science Research Center, Applied Science Private University, Jordan,
Adnan Qubbaja
Associate professor, Finance Department, Faculty of Administrative and Financial Sciences, Palestine Ahliya University, Palestine,
Abstract
This paper aimed to investigate whether the profit generated by banking sector in Jordan influenced by change on current ratio or not. Analysts utilize liquidity ratios to assess whether banks have the capability to fulfill their short-term obligations based on their current assets. Previous researchers depend on different measures for liquidity and profitability, however, in this study depend on one liquidity indicator ( current ratio ) and used ( net profit margin ) to measure of profitability. For this purpose, the population used of this study will represents banking sector, whereas the sample consist of 8 banks operating in Jordan listed at Amman Stock Exchange (ASE)as a panel data covering the period from 2015 to 2019. The information of this study was obtained from financial reports that presented annually from these banks. The implemented model to analyze data is the fixed effect model. This paper relied on net profit margin as dependent variable. Using current ratio as independent variables. The results illustrate that the net profit margin has positively affected by current ratio.