An Empirical Study of Free Cash Flows and Firm's Profitability In Listed Companies of the Pakistan Stock Exchange


  • Ain Bemisal Department of Business & Management,Bath Spa University Academic Centre, RAK. UAE
  • Ali Raza Near East University, Institute of Social sciences, Department of Banking and finance, City Lefkosa, North Cyprus, State Mersin 10, Turkey
  • Saddam Ali Balal Department of Business Administration,Mohtrarma Benazir Bhutto Shaheed Campus, University of Sindh, Dadu, Pakistan


Free Cash Flows, Profitability, Leverage, Firm Size, Return on Assets, Return on Equity, Stock Exchange.


Every organization sets its goal to increase productivity, managers in corporate organizations, therefore, do every possible effort to enhance their performance and profitability. This study aims to determine how free cash flows affected Pakistan Stock Exchange (PSX)'s profitability while taking into account a variety of the Islamic Republic of Pakistan's non-financial sectors. The existing literature has advanced the free cash flow hypothesis as one of the factors affecting corporate performance. This study is descriptive in nature. Secondary data from 2011-2022 gave enough data which was used in the analysis. The study's population included 84 companies from Pakistan's different 5 sectors, and 58 non-financial enterprises were selected to create a predictive model of how cash flow affects profitability.  Panel regression showed 72% variations in ROA and 25% variations in ROE.  FCF positively affects ROA (β= 0.04, p= 0.05). FCF negatively affects ROE (β=-0.26, p= 0.04), hence this study discovered significant and applicable insights for the users.




How to Cite

Bemisal, A., Raza, A., & Balal, S. A. (2023). An Empirical Study of Free Cash Flows and Firm’s Profitability In Listed Companies of the Pakistan Stock Exchange. Journal of Contemporary Business and Islamic Finance (JCBIF), 3(1), 240–249. Retrieved from
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