This paper investigates the persistence of earnings components and pricing test of abnormal changes in cash for selected firms listed on Tehran Stock Exchange (TSE). The proposed study gathers the necessary data from 166 firms over the period 2004-2012 from firms whose shares were actively traded on TSE market. The study uses Panel data and with the implementation of linear regression technique examines four hypotheses. The results indicate that abnormal negative changes in cash are more persistence than positive abnormal changes. In addition, both positive and negative abnormal changes are more persistence than accruals. Market also has a good perception on abnormal positive and negative changes in cash.

This study examines the relationship between the working capital management and profitability for a real-world case study in Iran over the period 2004-2012. There are three components associated with working capital including account payable period, inventory turnover period and receivable account period. The study uses cash conversion cycle to investigate the impacts of working capital management on profitability, simultaneously. We use Pearson correlation ratios as well as regression techniques to study different hypotheses. The result indicates an inverse relationship between variables of working capital and profitability. It means if account receipt, cash conversion cycle and period of debt payment increase, the profitability of this company will decrease so managers can create more value that is positive for shareholders by decreasing period of debt payment, period of inventory turnover and period of demand collection.