The relationship between current ratio and financial leverage of the companies listed in Tehran stock exchange

Since companies are developing in today's world and they have to compete with multiple factors and expand their activities through new financing in order to survive, they go after financial resources. The most important issue is to find out how the debt and cash flow generated in the firm affect current ratio. The objective of this research is to determine whether or not there is a significant relationship between current ratio (independent variable) and financial leverage (dependent variable). In the other words, this ratio is known as a measure of liquidity of the company. By liquidity ratios, the company's power to pay current liabilities (when they reach maturity date) can be determined. Among the listed companies in Tehran Stock Exchange, 85 companies during the period 2010-2014 have been selected based off of systematic elimination method. The statistical method used to test hypotheses in this study, is multivariate regression of panel data. Given the research results, there is a significant and inverse relationship between current ratio and financial leverage. (C) 2015 IASE Publisher. All rights reserved.