Determinants Of A Fast-Growing Firm’s Profits: Empirical Evidence For Slovenia

Abstract

This paper seeks to explain the relationship between a firm’s profitability and firm size, leverage ratio and labour costs – using a sample of 782 Slovenian fast-growing firms from the years 2008 and 2009. We determined that profitability is negatively related to the firm size and leverage ratio, but positively to the labour costs. These results illustrate that, with increasing firm size, a fast-growing firm becomes less profitable. The negative coefficient for the leverage ratio indicates that the higher the extent to which debts were used as the source of financing, the lower the profits. One explanation for this is that profitable, fast-growing firms rely on their equity capital. Alternatively, higher-leveraged firms bear greater risks of bankruptcy; consequently, creditors are reluctant to approve credit for such clients. The positive association between labour costs and profitability implies that the higher the labour cost, the higher the profitability of fast-growing firms.

Determinants of Profitability: Evidence from Real Sector Firms Listed in Borsa Istanbul

“…Generally, our results in terms of size are similar to those of Majumdar (1997) for India; Pervan and Mlikota (2013) for Croatia; Nunes and Serrasqueiro (2015) and Nunes et al (2009) for Portugal, Yazdanfar (2013) for Sweden, Andres (2008) for Germany, and Asimakopoulo et al (2009) for Greece. However, these results contradict those of Goddard et al (2005) for Belgium, Spain, Italy, France, and the UK, Močnik and Širec (2015) for Slovenia, Hunjra et al (2014) for Pakistan, and Saito (2008) for Japan.…”

Analisis Perbedaan Kinerja Perusahaan antara Perusahaan yang Terindeks LQ45 dengan Perusahaan Non LQ45

“…Peningkatan utang perusahaan akan berimbas pada menurunnya solvabilitas perusahaan yang kemudian akan berakibat pada menurunnya return saham yang akan diperoleh (Purwitajati, 2016). Penggunaan modal sendiri untuk membiayai perusahaan akan memangkas beban tetap akibat utang sehingga dapat meningkatkan profitabilitas perusahaan (Mocnik & Sirec, 2015). Utang jangka panjang maupun utang jangka pendek dapat mengurangi kinerja perusahaan, apabila utang perusahaan jumlahnya lebih besar dari total modal perusahaan maka kinerja perusahaan tidak akan berjalan baik sehingga manajer perlu memperhitungkan dengan baik proporsi leverage perusahaan (Awais, et al, 2016).…”

Ownership Concentration, Dividend Policy and Firm Performance in Pakistan

“…However, other research found a negative or weak negative association between size and firm performance. For instance (Močnik & Širec, 2015)and (Banchuenvijit & Pariyanont, 2012) shed light on the factors like firm size, that determines the profitability of a developing company using a sample of 782 Slovenian fast-growing companies. The result from the findings showed a negative association between firm company and profitability.…”