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Evermore, accounting profit forecast as a factor in financial issues and economic decision-making is been a favorite of all people those related to companies' activities such as investors, creditors, managers, financial analysts, and researchers. So, the effective elements on the fluctuation of profit could absorb financial managers' attentions same as sponge.
As Mehrani and Hesarzade, (2012), confessed that Profit can be the major financial statement items that attracted the attention of the users of the financial statement same as investors, creditors, directors, employees, analysts, governments and other users of financial statements of profit use as a basis for making investment decisions, lending, policy interest payments, evaluating, the calculation of taxes and other decisions, people entirely need Information provided by the organization and therefore profits, based on past events, but investors who need information about the future of the organization.
Many investors considered in their forecasts, factors such as return on equity and price-to-earnings (P/E) ratio, profitability, stock options and market situation, economic fluctuations and level of profit. Two main questions in this filed are discussed by some research:
1. Is there the relationship between volatility and predictability of profits in the short-term and long-term?
2. Is there the relationship between predictability and the level of profits in the short term and long term?
The profits volatility determined the standard deviations of the fiscal year were identified and four of its previous financial year. Profit volatility is classified into five classes of low volatile up to high. The predictability is probed as an ability to predict future profits.
Statistical tools employed are classified as follows:
1) Associated with regression testing
2) Test the variables associated with the relationship
The result of studies and analysis an Iranian bank and the period covered by this study is 5 years and the years 2009 till 2014 proved that the volatility and predictability of profit in short-term and long-term had a negative relationship. As well as the profit volatility and profit level in short-term and long-term profit had a negative relationship. Clearly, in little damping current profit was more appropriate description of the criteria for the future profits to the volatile situation.
There was a positive relationship between the level of profit and the ability to forecast profits. In fact, the ability to forecast profits in the short-term and long-term profits was more than median profit. Adjusted coefficient of determination is 0.631 and total stability coefficients for each class were likely to be significant.
A paper about the study appeared recently in Journal of Finance and Accounting, ISSN: 2330-7331 (Print);
ISSN: 2330-7331 (Online) (http://www.sciencepublishinggroup.com/j/jfa) DOI: 10.11648/j.jfa.20150304.12.