The Role of Financial Analysis on Decision-Making and Its Predicting Power of Financial Distress among Non-Financial Companies Listed on the Palestine Exchange رسالة ماجستير

Abstract

This study aims to examine the role of the financial analysis in decision-making and its power to predict financial distress among non-financial companies listed on the Palestine Stock Exchange. It scrutinizes the most significant financial techniques, tools, and methods used to observe their importance in decision-making and their power in predicting financial distress. To test the research hypotheses, the descriptive analytical methodology was used by designing a questionnaire that contained several dimensions to measure the importance of the financial analysis in the decision-making process. The questionnaire was distributed to general managers, financial managers, senior accountants, and financial analysts of (33) non-financial companies; 74 responses were received back from them. The results showed the existence of an important positive impact in using the analysis of financial ratios (liquidity, solvency, profitability, and activity) in the decision-making process. The analysis of the financial statements of the 33 listed non-financial companies was conducted between 2019 to 2022 to examine the power of predicting financial distress using the Altman Z Score Model and calculating financial ratios (liquidity, solvency, profitability, and activity). This process has resulted in 512 observations. The results showed that the financial ratios (liquidity, solvency, and activity) have a significant impact on the power of predicting financial distress in the Palestinian non-financial listed companies. However, there is no significant relationship between profitability indicators and financial distress. The necessary statistical analyses were conducted to test the hypotheses using the statistical analysis program SPSS and the statistical program (EViews) to apply all statistical and measurement methods