Companies&rsquo; operating cash flow ratios and the performance of their stocks: evidence from Philippine Stock Exchange

Rommel  A. Avillanoza,; Dwight Il-woo  U. Paguia,; Jan Zyrel  F. Liboro,; Jelly  E. Patricio,; Ladybelle  B. Fuentes,; Rizza Joy  E. Evangelista,

Companies’ operating cash flow ratios and the performance of their stocks: evidence from Philippine Stock Exchange

Discipline: Finance, others in business and management

Abstract:

The law of supply and demand and principle of risks and rewards are fundamentals to realization of extraordinary profits in stock investing and trading. The same complex business opportunities are present in the Philippine Stock Market. The increase in stock market participants has become significant in the recent years. This study is essentially conducted to identify specific patterns within the Philippine stock market to ultimately improve models for profitable stock investing and trading. This study has purposively selected three industrial classifications and took all companies operating within these industries, able to provide needed information during 2017-2021, as samples. This study analyzed the capability of operating cash flow to predict the behavior of stocks within the context of the Philippine stock market. Additionally, the differences in stock movement was studied between groups of companies according to industrial classification and firm size. It was found that computed operating cash flow ratios cannot predict stock price and stock volatility. Also, difference in stock price are found significant between companies according to firm size.

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