South Asian Journal of Management

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Financial Management As a Determinant of Profitability:A Study of Indian Pharma Sector


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1 Shri Chimanbhai Patel Institute of Management & Research (CPIMR), Ahmedabad, India
     

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This paper aims to examine the relationship between financial management and profitability of the enterprise. Financial management, invariably, has two aspects—mobilization of funds and deployment of funds. Both these aspects of financial management have immense potential to influence the profitability—the former through incurrence of costs and the latter through generation of revenue. The study uses six variables viz. Long-term Debt to Equity Ratio (LTDER), Inventory Ratio (IR), Debtors Ratio (DR), Creditors Velocity (CRSV), Total Assets to Sales Ratio (TASR) and Profit After Tax to Sales Ratio (PATSR), covering both the aspects of financial management. These variables are studied for 64 public limited pharmaceutical companies for a period of 10 years. The observations are analyzed using statistical techniques. The empirical results suggest that TASR and CRVS are the important variables to be paid greater attention while optimizing the profitability of the enterprise.
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  • Financial Management As a Determinant of Profitability:A Study of Indian Pharma Sector

Abstract Views: 179  |  PDF Views: 0

Authors

Ashvin R. Dave
Shri Chimanbhai Patel Institute of Management & Research (CPIMR), Ahmedabad, India

Abstract


This paper aims to examine the relationship between financial management and profitability of the enterprise. Financial management, invariably, has two aspects—mobilization of funds and deployment of funds. Both these aspects of financial management have immense potential to influence the profitability—the former through incurrence of costs and the latter through generation of revenue. The study uses six variables viz. Long-term Debt to Equity Ratio (LTDER), Inventory Ratio (IR), Debtors Ratio (DR), Creditors Velocity (CRSV), Total Assets to Sales Ratio (TASR) and Profit After Tax to Sales Ratio (PATSR), covering both the aspects of financial management. These variables are studied for 64 public limited pharmaceutical companies for a period of 10 years. The observations are analyzed using statistical techniques. The empirical results suggest that TASR and CRVS are the important variables to be paid greater attention while optimizing the profitability of the enterprise.