Advances in Economics and Business Vol. 5(3), pp. 167 - 175
DOI: 10.13189/aeb.2017.050305
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The Prediction of Future Profitability Using Life Cycle Theory Based on Cash Flow Pattern


Zahra Hashemi Oskouei 1,2,*, Rasoul Baradaran Hasan Zadeh 2
1 Department of Accounting, East Tehran Branch, Islamic Azad University, Iran
2 Department of Accounting, East Azarbaijan Branch, Islamic Azad University of Tabriz, Iran

ABSTRACT

This paper aims to predict the future profitability of a firm using the life cycle theory based on the cash flow statement. In this study, changes in return on net operating assets were considered as a dependent variable. The profitability factors were independent variables and the risk factors were used as a control variable in order to examine the prediction of the future profitability. The statistical samples were classified into the stages of introduction, growth, maturity, shake-out and decline by using cash flow patterns. The results of 1,123 (firms - years) over the time period of 2002 and 2011 showed that the return of the net operating assets, their variations and changes in the asset turnover at different stages of the life cycle have an impact on the future profitability of the firms.

KEYWORDS
Prediction, Profitability, Firm's Life Cycle, Cash Flow Pattern

Cite this paper
Zahra Hashemi Oskouei , Rasoul Baradaran Hasan Zadeh . "The Prediction of Future Profitability Using Life Cycle Theory Based on Cash Flow Pattern." Advances in Economics and Business 5.3 (2017) 167 - 175. doi: 10.13189/aeb.2017.050305.