Exploring the impact of cash flow, company size, and debt on financial performance in corporations

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This paper investigates the impact of operating cash flows, company size, and debt (including both cash and operating flows) on the financial performance of Kosovo’s ten most prominent publicly traded companies. Various analytical techniques were employed for hypothesis testing, including OLS linear regression analysis, correlation analysis between variables, and statistical tests such as the T-test and Ratio test. The financial performance analysis involves utilizing Return on Assets (ROA) as the dependent variable, while the independent variables encompass operating cash flows (CFO), firm size, and financial leverage.
The study’s findings reveal noteworthy insights. Although cash flow (p > 0.05) is not observed to have a significant impact, larger company size (p < 0.01) is associated with diminished financial performance. Conversely, higher debt leverage (p < 0.01) is linked to enhanced financial performance. Consequently, the results underscore the significant economic implications that firm size and financial leverage hold for the financial performance of corporations in Kosovo, as indicated by ROA.
The observation that firms size plays a substantial role in financial performance aligns cohesively with established economic theory. As companies expand, they often encounter challenges related to efficient resource management.

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    • Table 1. Summary statistics for the variables integrated into the econometric model
    • Table 2. Normality test
    • Table 3. Summary of regression coefficients
    • Table 4. Hypotheses testing results
    • Conceptualization
      Arta Hoti Arifaj
    • Data curation
      Arta Hoti Arifaj
    • Methodology
      Arta Hoti Arifaj
    • Supervision
      Arta Hoti Arifaj
    • Funding acquisition
      Vlora Berisha, Elsa Avdyli
    • Project administration
      Vlora Berisha
    • Resources
      Vlora Berisha
    • Visualization
      Vlora Berisha, Elsa Avdyli
    • Writing – review & editing
      Vlora Berisha, Elsa Avdyli
    • Formal Analysis
      Fisnik Morina
    • Investigation
      Fisnik Morina, Elsa Avdyli
    • Software
      Fisnik Morina
    • Writing – original draft
      Fisnik Morina