Iranian Journal of Finance

Abstract The main goal of managing for-profit companies is to maximize shareholders' wealth, and to achieve it, management needs to make decisions regarding the sources and uses of capital. Different theories have been tried to explain the relationship between capital structure and performance, and have estimated a different relationship for financial leverage and company performance in different conditions. Financial leverage and operational leverage are two factors that influence the performance and macro policies of the company in terms of the profitability process. This research examines the effect of operational leverage and financial leverage on the company's profitability and financial distress, and finally examines the effect of replacing these two Leverages to maximize the profitability process and reduce the risk of financial distress. The sample includes 263 companies listed in the Tehran Stock Exchange and the Iran OTC Company from 2011 to 2021, which have passed the four screening factors of this study. The fixed effect panel regression method was used to test the first and second hypotheses. The results indicate a positive relationship between operational leverage and the profitability of companies, while the relationship between financial leverage and the profitability of companies is negative. On the other hand, both Leverages increase the risk of financial helplessness. To improve profitability, operational leverage can be replaced by financial leverage. Increasing operational leverage and reducing financial leverage can be used as a tool to grow the company's profitability; however, to reduce the helplessness of the companies and improve the profitability process, operational leverage can be replaced with financial leverage. Flexibility in financing companies is more than flexibility in the operational sector; that is why replacing operational leverage with financial leverage is more appropriate to improve profitability and reduce the risk of financial helplessness.

Abstract Cash flow forecasting has significantly increased since 2000 due to more attention paid by investors and financial analysts than before. If cash flows can be predicted appropriately, a significant part of the informational needs associated with cash flows will be provided. In this regard, this study aims to examine the impact of firm characteristics on predictable future cash flows from operating activities by employing present operating cash flow and profitability. Eight hypotheses were developed, and the information was analyzed for 127 firms listed on the Tehran Stock Exchange between 2011 and 2020. The regression model was tested with a fixed effect model using panel data. The study's findings showed that firm characteristics like size, level of competition, and level of supervision positively impact the predicting power of present operating cash flow and profitability in anticipating future operating cash flow. By contrast, the outcomes disclose that characteristics such as the company's life will not significantly affect the predicted strength of present operating cash flow and present profitability to forecast future cash flow from operating activities.