SMART JOURNAL OF BUSINESS MANAGEMENT STUDIES VOL. 7 NO. 2 PAPER 6
 
DETERMINANTS OF PROFITABILITY: A STUDY WITH REFERENCE TO INCOME SIZE-WISE ANALYSIS OF SELECTED FIRMS OF FOOD INDUSTRY IN INDIA
 
Ramachandran Azhagaiah* and Raju Deepa**
*   Associate Professor of Commerce, Kanchi Mamunivar Centre for Post Graduate Studies, (Autonomous Centre with Potential for Excellence by UGC) Puducherry, India
Ph.D Research Scholar, Department of Commerce, Kanchi Mamunivar Centre for Post Graduate Studies (Autonomous Centre with Potential for Excellence by UGC),Puducherry, India
 
Profitability (P) is the profit earning capacity which is a crucial factor in contributing to the survival of the firms. The perpetual existence of the firm depends on the profit earning capacity of the firm, which is also considered as the main factor in influencing the reputation of the firm. Further, the borrowing capacity of the firm is also determined by P. Thus, it is considered as the main factor in determining the capital structure of the firm. This paper is an attempt to study the impact of income size on P, considering the “income” as the control variable. For studying the impact of income earned on P, the selected firms of Food Industry are classified into three size categories viz., “low income”, “medium income”, and “high income” firms based on the Earnings Before Interest, Tax and Depreciation (EBITD) of the firm. The study proves that under the regression model 2 (after removing the predictor variable size (SIZ)) of low income firms), capital intensity (CAPINS) has significant positive coefficient (0.463) with P, while for medium income firms, growth (GROW) has significant negative coefficient (-7.515) with P. Also volatility (VOL) has negative coefficient (-10.416) with P. The regression model 2 of high income firms shows that GROW has significant negative coefficient (-7.515) with P, indicating that the increase in the asset could not impact the P of high income firms of Food Industry in India. Hence, Ho 3 and Ho 4 are rejected in the case of high income firms. Liquidity (LIQ) is, however, not significant for all the categories of income size.
 
KEYWORDS: Profitability (P), Volatility (VOL), Growth (GROW), Liquidity (LIQ), Capital Intensity (CAPINS), Return on Asset (ROA), Return on Investment (ROI) JEL CLASSIFICATIONS: L32, L66, M29 FULL TEXT