The Effect of the Financial Leverage on the Profitability in the Tourism Companies (Analytical Study- Tourism Sector- Jordan)

Maher Odeh Shamaileh,Salim M Khanfar

doi:10.5296/ber.v4i2.5546

Abstract

This study aims to identify the financial leverage ratio and the rate of return on investment on profitability for sources of the funding in tourism companies which operating in Jordan. And to achieve this study the researcher use some companies related to the Tourism sector from the firms that listed in Amman Stock Exchange. The study finds the existence of a statistically significant impact for the independent variables (financial leverage and ROI) of the Tourism companies on the Profitability. Moreover, this study concluded that the independent financial variables explain the 4.4% percentage of changes occurring in the Profitability since they are considered as the dependent variable. Furthermore, the results indicate the presence of a statistically significant impact for the financial leverage on the Profitability of the Tourism companies listed in the Amman Exchange.

Highlights

During the last years, Jordan witnessed a great development in various economic fields, and the development of Tourism sector is considered to be one of the main important aspects of economic progress in Jordan
This study concluded that the independent financial variables explain the 4.4% percentage of changes occurring in the Profitability since they are considered as the dependent variable
The results indicate the presence of a statistically significant impact for the financial leverage on the Profitability of the Tourism companies listed in the Amman Exchange

Summary

Introduction

Jordan witnessed a great development in various economic fields, and the development of Tourism sector is considered to be one of the main important aspects of economic progress in Jordan. 2014, Vol 4, No 2 financial market increased from 163 companies in 2000 to become 277 in 2010, all of them working in different economic sectors (Amman Stock Exchange, 2011). Within the scope of modernization of capital market in Jordan, the Jordanian government validated a number of laws in 1997 which aim at developing the capital, including securities law where securities commission, Amman Stock Exchange, and securities depository center were established according it. The return on investment is the expected amount added to the wealth or returns during a future period of time. As long as this return is related to the future, it is uncertain, in other words it carries a number of risks that are usually measured quantitatively through contrast or standard deviation of potential returns

Objectives

Methods

Results