The impact of financial flexibility on investment efficiency

Abstract

The current study seeks to define financial flexibility in industrial companies and their practices to reach investment efficiency after identifying financial flexibility and the extent of its impact through its indicators (financial leverage, net cash flow, debt susceptibility) as an independent variable in investment efficiency with its indicators (asset turnover rate, capital turnover rate factor, accounts receivable turnover rate, inventory turnover rate, rate of return on investment) as the dependent variable.

The study problem was defined by the following main question: Does financial flexibility have an impact on investment efficiency? What is the level of their relationship? In order to find the answer to this question, it was tested in Iraqi industrial companies, and the study was applied to a sample consisting of (10) industrial companies using the financial data published on the website of the Iraq Stock Exchange, and for the time period (2012_2021).

The study sought to test its three main hypotheses related to the influence relationships between its variables for the sake of the questions that were raised and to identify the problem through them in order to reach the goals and objectives that the study aspires to reach, including diagnosing the level and role of each of financial flexibility and investment efficiency in industrial companies, the study sample, identifying mechanisms And the practices on which the variables of the study are based, with an indication of the difficulties and challenges facing workers in applying them and what are the ways to address them and achieve them. In order to process the data, many financial indicators and statistical methods were used, including unit root tests, the linear correlation coefficient test (Pearson), the limits test, and multiple linear regression, and the results were extracted using the statistical program. )Eviews_9).

The results of the current study showed that there is an effect of financial flexibility on investment efficiency during the period under study (2012_2021). It was found through testing the limits of the variables of the current study that there is a long-term equilibrium relationship between the variables of the study, and there is a correlation between financial flexibility and investment efficiency during the period Under study (2012_2021).