The Impact of Financial Modeling on Profit Growth in the Jordanian Industrial Sector: a Pathway to Sustainable Industry

Objective: This study examines the impact of financial modeling on profit growth in Jordanian industrial sector, aligning with Sustainable Development Goals (SDG 9) – Industry, Innovation, and Infrastructure. The research aims to analyze how internal financial indicators (company size, paid-up capital, liquidity, long-term loans) and external economic indicators (GDP, inflation rate) influence profitability, measured by return on equity (ROE), return on assets (ROA), and net income. Theoretical Framework: The study is grounded in financial modeling theory, which integrates quantitative financial analysis with economic indicators to enhance corporate decision-making. The research builds on prior studies analyzing the relationship between financial structures, economic conditions, and corporate profitability, emphasizing the role of financial modeling as a strategic tool. Method: The study employs multiple regression analysis and Fully Modified Ordinary Least Squares (FMOLS) estimation to analyze financial data from Jordanian industrial companies listed on the Amman Stock Exchange between 2005 and 2021. Interaction effects between internal financial indicators and macroeconomic conditions are also examined. Results and Discussion: The findings indicate that company size, paid-up capital, and liquidity positively impact profitability, while long-term loans have a negative effect. GDP growth and inflation rates show a significant positive influence, suggesting that industrial firms benefit from economic expansion. The interaction analysis reveals that financial modeling enhances profitability when internal indicators align with favorable economic conditions. Research Implications: The study provides insights for financial managers and policymakers on optimizing capital structures, liquidity management, and leveraging macroeconomic trends. It highlights the necessity of integrating financial modeling techniques into strategic planning for improved financial performance. These insights contribute to achieving SDG 9 by supporting sustainable industrialization and financial stability. Originality/Value: This study contributes to the literature by demonstrating the interaction between internal and external financial factors in an emerging market context. Unlike prior research, it integrates financial modeling with macroeconomic indicators, offering a comprehensive perspective on profit growth dynamics in Jordan’s industrial sector.