Impact of Financial Variables on Profitability Performance of Selected Tea Companies in West Bengal

Impact of Financial Variables on Profitability Performance of Selected Tea Companies in West Bengal

1Dr. Gautam Roy

Assistant Professor, Department of Commerce, Berhampore College, Berhampore, Murshidabad, West Bengal, India. Email: gautamroy.1981@gmail.com

2Dr. Biswambhar Mandal

Associate Professor & HOD, Department of Commerce, University of Kalyani, Nadia, West Bengal, India. Email: biswambhar.mandal@gmail.com

Abstract:

Profit earning ability is called the profitability. It is the power of business for proper planning; controlling, optimum utilisation of available resources, proper management and profit planning capacity, follow-up all sections and make changes if needed. It is an indicator of how efficiently a business is operating, managed and policy has been taken. If a business is run efficiently and effectively then the earning capacity of the business is also more. It is the power how efficiently a business run and managed. Profitability of tea companies in West Bengal depends on so many factors. Financial performance is the indicator of firm’s working capital management and profitability management which helps us to identify the financial strength and weakness of the firms. We have taken nineteen variables of financial factors such as current ratio (CR), quick ratio (QR), cash position ratio (CPR), net working capital cycle (NWCC), short term debt equity ratio (STDER), interest coverage ratio (ICR), stock turnover ratio (STR), debtors turnover ratio (DTR), creditors turnover ratio (CTR), return on total income (ROTI), cash profit to total income (CPTI), return on capital employed (ROCE), return on assets (ROA), return on sales (ROS), total income total assets (TITA), return on net worth (RONW), cash profit to net worth (CPNW), total income to net worth (TINW), working capital to net worth (WCNW) out of which five are profitability indicators. The present study aims to identify the impact of financial variables on profitability of leading tea companies in West Bengal. The study covers nine leading tea companies in West Bengal based on market capitalisation. The study has been undertaken for the period of twelve years from 2011-12 to 2022-23. The necessary data have been obtained from CMIE prowess database. In order to analyse impact of financial variables on profitability nineteen variables have been used. Correlation coefficient analysis, linear multiple regression analysis and t-test has been used to test the relationship between the profitability and financial performance indicators. The multiple analyses represents that the entire five models are perfectly fitted and all dependent variable highly responded by the independent variables. The study will help the investors, the researchers and the management to identify the nature of tea companies in West Bengal and will also help to take decision regarding investment in tea companies in West Bengal.

Key words: Financial performance, tea companies in West Bengal, descriptive statistics, t-test, multiple regressions, and performance indicators.