The Distributional Properties of Financial Ratios of Jordanian Industrial Corporations

Basheer A. Khamees, Ali M. Quaqazeh

Abstract


This study aims to discover the distributional properties of financial ratios of the Jordanian industrial corporations during the year 2002. To achieve this aim, 11 ratios for a sample of 62 industrial corporations were calculated. Then, the normality of these ratios was examined. The results revealed that the current assets/ sales ratio, the quick asset/ sales ratio, the working capital/ sales ratio, the current ratio, the quick ratio and the net income plus depreciation expense/ total liabilities are not normally distributed. After that, the outliers were identified and deleted and the normality of the ratios was retested. The only ratio for which the normality was rejected is the quick ratio. Thus, the findings of the study showed that financial ratios are approximately normally distributed after deleting the outliers. In addition, the results showed that the distributions of the ratios were stable during the period 1998-2001 except for the current ratio distribution which was not stable. The non-normality of the current and quick ratios distributions can be explained by the fact that these ratios are exposed to window-dressing.

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