International Journal of Financial Management

Open Access Open Access  Restricted Access Subscription Access
Open Access Open Access Open Access  Restricted Access Restricted Access Subscription Access

The Assets Utilisation and Firm's Profitability: Empirical Evidence from Indian Automobile Firms


Affiliations
1 Associate Professor in Commerce, Erode Arts and Science College, Erode, Tamilnadu, India
     

   Subscribe/Renew Journal


Appraising asset utilization is a multi-task exercise conceived and performed because it measures how efficiently an organization uses its resources. The success of any enterprise is tied to its ability to manage and leverage its assets. Assets utilization ratios (turnover ratios) provide measures of management effectiveness. Hence, in this study a detailed analysis of assets turnover has been made for better understanding the factors responsible for changes in profitability in the Indian Automobile industry. The analysis of all the assets utilization ratios registered a fluctuating trend during the study period, which may be due to the difference into growth rate of sales because of the factors such as market conditions, pricing policy, government policy and competition. Comparatively, the companies under two and three wheelers sector out performed the commercial vehicles and passenger cars and multi-utility vehicles sector with respect to their asset utilization.

Keywords

Assets Utilisation, Profitability, Turnover Ratios, Factor Analysis And Automobile Industry
Subscription Login to verify subscription
User
Notifications
Font Size

  • Gupta, M.C., (1989). “Profitability Analysis”, Jaipur: Pointer publishers, p. 36.

  • Basant C. Raj, (1978). “Corporate Financial Management”, New Delhi: Tata McGraw-Hill, p.583.

  • Roy A. Foulke, (1978). “Practical Financial Statement Analysis”, New Delhi: Tata McGraw-Hill.

  • Kreps Cliften, H. and Richard. F.Wacht (1975). “Financial Administration”, Illinois: Housdale, p.45.

  • Gitman, L.J., (1976). “Principles of Management Finances”, New York: Harper and Row, p.52.

  • Chapman Findlay, M. and Edwards F. Williams (1970). “An Integrated Analysis for Managerial Finances”, New Delhi: Prentice Hall, p.70.

  • Van Horne, J.C (1983). “Financial Management and Policy”, New Delhi. Prentice Hall of India, pp.324-325.

  • Burton A.Kolb (1983), “Principles of Financials Management”, Texas: Business Publications, p.153.

  • Walker, E.W., and Boughn, W.H. (1974). “Financial Planning and Policy”, Harper International, p.151.

  • Vishnukanta Purohit (1998). “Profitability in Indian Industries”, New Delhi: Gayathri Publications.

  • Michaelas, N., Chittenden, F., and Poutziouris, P. (1999). “Financial Policy and Capital Structure Choice in U.K SMEs: Empirical Evidence from Company Panel Data”, Small Business Economics Journal, 12(2): 113-130.

  • Hall, G., Hutchinson, P., and Michael, M. (2000). “Industry Effects on the Determinants of Unquoted SME Capital Structure”, International Journal of the Economics of Business, 7(3):297-312.

  • Rajan, R., and Zingales, L. (2000). “The Firm as a Dedicated Hierarchy, a Theory of the Origins and Growth of Firms”, NBER working paper no. W7546.

  • Dhawan, R. (2001). “Firm Size and Productivity Differential: Theory and Evidence from a Panel of U.S. Firms”, Journal of Economic Behaviour and Organization, 44: 269-293.

  • Darko Tipuric (2002). “Is there Relationship between Firm Size and Profitability?”, Journal Zagreb International Review of Economics and Business, Conference issue, 5: 139-154.

  • Cassar, G., and Holmes (2003). “Capital Structure and Financing of SMEs: Australian Evidence”, Accounting and Finance Journal, 43(2):123-147.

  • Vijayakumar, A. and Kadirvel, S. (2003). “Profitability and Size of the Firm in Indian Minerals and Metals Industry”, The Management Accountant, pp. 816-821.

  • Abduraham, A., Hanna, A.S., Nordheim, E.V. and Russell, J.S., (2003). “Indicator Variable Model of Firms Size-Profitability Relationship of Electrical Contractors using Financial and Economic Data”, Journal of Construction Engineering and Management , 129:192-197.

  • Leledakis, G., Davidson, I., and Smith, J. (2004). “Does Firm Size Predict Stock Returns?: Evidence from the London Stock Exchange”, EFMA, 2004 Basel Meetings Paper.

  • Renu Luthra, Vaishampayan and Dheeraj Misra (2004). “Profitability and Size: A Study of Small Scale Industries in Uttar Pradesh”, The Icfaian Journal of Management Research, pp. 28-37.

  • Bala Ramasamy, Darrylong and Matthew C.H. Yeung. (2005). “Firm size, Ownership and Performance in the Malaysian Palm Oil Industry”, Accounting and Finance, 1: 81-104.

  • Goddard Tavakoli and Wilson (2005). “Determinants of Profitability in European Manufacturing and Service Sectors Evidence from Dynamic Panal Model”, Applied Financial Economics ,15:1269-1282.

  • Abdussalam Mahmound Abu-Tapanjeh (2006). “An Empirical Study of Firm Structure and Profitability Relationship: The Case of Jordan”, Journal of Economic and Administrative Sciences, Vol.22(1), pp.41-59.

  • Raja and Suresh Kumar, A. (2006). “Is Age or Size Influences Corporate Performance?”, PSG Journal of Management, 1(4): 51-62.

  • Bhattacharyya, Surajit, Saxena and Arunima (2009). “Does the firm size the matter?: An Empirical Enquiry into the Performance of Indian Manufacturing Firms”, http:mpra.ub.uni-muenchen.de/13029, MPRA paper no.: 13029.


Abstract Views: 364

PDF Views: 0




  • The Assets Utilisation and Firm's Profitability: Empirical Evidence from Indian Automobile Firms

Abstract Views: 364  |  PDF Views: 0

Authors

A. Vijayakumar
Associate Professor in Commerce, Erode Arts and Science College, Erode, Tamilnadu, India

Abstract


Appraising asset utilization is a multi-task exercise conceived and performed because it measures how efficiently an organization uses its resources. The success of any enterprise is tied to its ability to manage and leverage its assets. Assets utilization ratios (turnover ratios) provide measures of management effectiveness. Hence, in this study a detailed analysis of assets turnover has been made for better understanding the factors responsible for changes in profitability in the Indian Automobile industry. The analysis of all the assets utilization ratios registered a fluctuating trend during the study period, which may be due to the difference into growth rate of sales because of the factors such as market conditions, pricing policy, government policy and competition. Comparatively, the companies under two and three wheelers sector out performed the commercial vehicles and passenger cars and multi-utility vehicles sector with respect to their asset utilization.

Keywords


Assets Utilisation, Profitability, Turnover Ratios, Factor Analysis And Automobile Industry

References