Investigating the Effect of Free Cash Flow (FCF) on ROA, ROS and Rate of Growth of Profit in Tehran Stock Exchange

Several researches have been done to reach appropriate criteria for evaluating the companies’ and managers’ performance in order to make sure that the company’s trend is in harmony with the actual interests of investors and also a basis for the potential investors and creditors to make economic decisions. In this research for some of the listed companies at Tehran Stock Exchange (TSE), we have studied the effect of free cash flow(FCF) on return on assets, rate of growth of profit and return on sales indexes. A sample of 123 companies was selected during time period of 2006 to 2012 and then the collected data are investigated by using multi-variable regression model. Results show that free cash flow will affect return on assets; but, there is no influence on the rate of growth of profit and return on sales.