The Assets Utilisation and Firm’s Profitability: Empirical Evidence From Indian Automobile Firms

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 ratios 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 then 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.

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