Assessing the Financial Health of the Company and its Relationship to its Market Value Added: Evidence from Industrial Companies Listed on the Amman Stock Exchange for the Period (2013-2021)

Abstract

Purpose: The research aimed to analyze the relationship between the financial health of the company and the market value added assuming a significant correlation between the two variables. Methodology: Financial health was measured based on the Z-Score model while the market value added (MVA) was measured based on the capital invested in the company and the market value of the company. The sample of the study consisted of (8) industrial companies listed on the Amman Stock Exchange for the period (2013-2021). The principal data utilized in the analysis came from the balance sheets and profit and loss reports that were available on the official websites of the research sample companies. Findings: It was revealed through the analysis of the two variables that the company (APOT) shows higher financial health and market value added than the rest of the companies, followed by a number of companies in the research sample that had good financial health and market value added. Results of the analysis of the relationship between the two variables showed a significant positive relationship between the financial health of the company and the market value added, meaning that the better the financial health of the company, the more its market value increases and thus wealth is added to the owners. Unique Contribution to Theory, Practice and Policy: The results of this work can be used to improve the financial performance of companies, which calls for regular evaluation of the financial situation, identification of strengths and weaknesses in one's financial position, and an effort to mitigate risks and correct any shortcomings prior to their representation in the financial statements, The firm must also follow a strong financial strategy to achieve success and sustainability in the financial market.