Inflation, Leverage, and Company Size and Their Effect on Profitability

Nugraha, Nugi Mohammad; Ramadhanti, Annisa Arifianti; Amaliawiati, Lia

doi:10.30871/jaat.v6i1.2854

Cited by 6 publications

(8 citation statements)

References 10 publications

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“…This research falls under the category of applied research, employing a quantitative approach (Susanti et al, 2021;Ramadhanti et al, 2021). The research methodology employed in this study involves descriptive and verification methods (Amalia, 2020;Nuryaman & Veronica, 2015;Nariswari, 2020).…”

Section: Methodsmentioning

confidence: 99%

“…The data collection technique employed in this study encompasses library research and internet research . The study utilizes secondary data in the form of financial statements for analysis and examination (Ramadhanti et al, 2021) of businesses listed in the Ministry of Finance, Labour and Transfers for the period 2018-2021.…”

Section: Methodsmentioning

confidence: 99%

“…Profitability refers to a ratio that assesses the efficiency of management in achieving profits relative to sales and investments (Fahmi, 2012). The profitability ratio serves as an indicator of a business's ability to generate income from its various capacities and existing resources, including sales activities, cash flow, capital, employee count, number of branches, and more (Susyana & Nugraha, 2021;Ramadhanti et al, 2021). When businesses generate profits, or in other words when they are profitable, it means that they have positive financial performance.…”

Section: Profitability Of Businessesmentioning

confidence: 99%

“…Producers' perspective highlights that a heightened level of inflation leads to increased production costs in the market. This circumstance can impact business performance causing profitability to decline as the inflation rate rises (Mufidhoh et al, 2017;Ramadhanti et al, 2021). According to Sanusi and Wiayanti (2022), an increase in inflation can reduce the level of profitability and stock returns expected by investors.…”

Section: The Impact Of Inflation On the Profitability Of Businessesmentioning

confidence: 99%

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The Impact of Inflation on the Profitability of Businesses: Evidence from Kosovo

Tërstena

Deda

Todorova

et al. 2023

JESR

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The aim of this paper is to assess how inflation affects the financial performance of businesses operating in Kosovo. More precisely, the impact of inflation and profit tax on the profitability of businesses is analysed, as well as the relationship between the profitability of businesses with the inflation level, the profit tax, the net wages level and the GDP level of Kosovo for the period 2018 - 2021. In this study, the quantitative approach was applied and the descriptive and verification method was used as the research method. Analyses performed include linear regression analysis and linear trend analysis. The data used in the research are secondary data provided by the financial statements of businesses operating in Kosovo published by the Ministry of Finance, Labour and Transfers. The research sample included 120 businesses. The results of this study show that, for the analysed period 2018 - 2021, inflation and profit tax have a positive impact on the profitability of businesses in Kosovo, as well as there is a positive relationship between the profitability of businesses with the inflation level, the tax on profit, the net wages level and the GDP level in Kosovo. This study contributes to the literature as evidence that makes clear the impact of inflation on the profitability of businesses in Kosovo and can serve as a good basis for other researchers who analyse similar aspects in the future. Received: 20 March 2023 / Accepted: 13 June 2023 / Published: 5 July 2023

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Section: Methodsmentioning

confidence: 99%

Section: Methodsmentioning

confidence: 99%

Section: Profitability Of Businessesmentioning

confidence: 99%

Section: The Impact Of Inflation On the Profitability Of Businessesmentioning

confidence: 99%

See 2 more Smart Citations

The Impact of Inflation on the Profitability of Businesses: Evidence from Kosovo

Tërstena

Deda

Todorova

et al. 2023

JESR

View full text Add to dashboard Cite

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“…The audit committee is a small committee of the board of directors, independent and outside the directors (Anas, 2021). The size of the audit committee is measured by the number of audit committee members Company size, measured by company assets, shows the company's assets (Nugraha et al, 2021). Company size is measured by natural logs (Ln) total assets…”

Section: Variable Identificationmentioning

confidence: 99%

An empirical assessment of corporate governance components and their impact on profitability: evidence of listed banks in Indonesia

Mukoffi

Suhendri²,

Hastuti³

et al. 2022

JES

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This study aims to determine the effect of business size, capital structure, audit committee, board of directors, and board of commissioners on company profitability in banking companies listed on the Indonesia Stock Exchange from 2018 to 2021. A total of 42 banking companies are the study sample. A purposive sampling technique was used to get 10 sample companies for 4 years with 40 observations. The research data comes from a sample of companies from the Indonesian Stock Exchange website. Multiple regression analysis and descriptive statistical analysis are the data analysis methods used. The research findings show that company size affects profitability, but the board of directors, board of commissioners, audit committee, and capital structure do not affect company profitability.

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The determinants of profitability in non-financial UK SMEs

Youssef¹,

Salloum²,

Sayah³

2022

EBR

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Purpose The purpose of this study is to examine determinants of profitability of non-financial firms listed small- and medium-sized enterprises (SMEs) in the UK from 2012 till 2020. It has been argued that profitability plays a key role in economic development and growth. Despite the important role that SMEs play in developed economies like UK, academic research into SMEs profitability determinants in developed countries is not extensive. Design/methodology/approach The methodologies used include dynamic panel data estimation techniques. Relationship of nine independent variables with profitability was examined. Two models are created using return on assets (ROA) and return on equity (ROE) as dependent variables. Size, age, efficiency, working capital, liquidity, leverage and volatility of the firm represent firm-specific independent variables. Two macroeconomic variables, namely, gross domestic product and inflation are also used as independent variables. Data obtained from Thomson Reuters Data Stream for 93 listed SMEs companies in the UK from 2012 to 2020. Fixed effects, random effects and generalized method of moments were used in data analysis. Findings All variables showed significant influence on profitability, except liquidity reflecting insignificant impact on profitability in two regression models conducted for 93 firms under study. Efficiency, liquidity and leverage are the only three independent variables with similar impact on both ROA and ROE. Practical implications Identifying determinants of profitability will help stakeholders and corporate executive make sound decisions to ensure sustainability and stability at the firm level. This is particularly important given the key role played by SMEs in economic development and growth. The findings of this study would help direct financial management practices to ensure a favorable sustainable organizational performance. Originality/value This study differs from previous studies that focused mainly on developing countries; with limited research conducted on profitability of SMEs in developed economies. To the best of the author’s knowledge, this is the first study to examine factors influencing profitability of SMEs in UK. Previous studies concentrated on service sector like insurance and hotel firms.

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Inflation, Leverage, and Company Size and Their Effect on Profitability

Cited by 6 publications

References 10 publications

The Impact of Inflation on the Profitability of Businesses: Evidence from Kosovo

The Impact of Inflation on the Profitability of Businesses: Evidence from Kosovo

An empirical assessment of corporate governance components and their impact on profitability: evidence of listed banks in Indonesia

The determinants of profitability in non-financial UK SMEs

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