Accounting Profitability and Future Share Prices: Evidence from Investment Sector of Pakistan

Financial ratios is a key attribute of valuable accounting information. Profitability ratios enables investors in yielding investments. This paper investigates the effect of profitability ratios of investment and securities firm on their future shares prices for a period of (2009-2018) listed on Pakistan Stock Exchange. The independent variables are, Return on Assets, Return on equity, Earning per Share, Price Earnings Ratio and FSP (future share price) were used as dependent variables. Twenty one firms’ data were available for the said variables and were used for estimations. The current accounting profitability ratio, price earnings ratio has positively significant relationship with future share price, while earnings per share, return on asset, and return on shareholder equity insignificant to the future share prices of investment firms. It shows that the future share prices of investment and securities firms can only be predicted with the help of current price earnings ratio in Pakistan.