Outlining the Profitability Analysis of Select Public Sector Fertilizer Companies in India
Keywords:
Fertilizer Companies, Profitability, Fixed Effect, Panel Data RegressionAbstract
Profitability analysis assists businesses in comprehending their ability to generate income by providing the necessary resources. This paper makes an attempt to find out which financial variables - including liquidity, solvency and management efficiency - have impact on the profitability of the selected fertilizer companies in India. Empirical data from 15 listed fertilizer companies over the period of 2010-11 to 2021-22 have been considered for the study. The study reveals that fixed effect is persistent in panel data, and from the results it is evident that cash to current assets ratio, proprietary ratio and total assets turnover ratio have significant impact on return on total assets at 1% level of significance. Whereas, cash to current assets ratio and proprietary ratio have significant impacts on return on capital employed at 1% level of significance, total assets turnover ratio is found to be significant at 5% level of significance. It is also found that all the three explanatory variables are positively influencing profitability, more so for cash to current assets ratio.
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