Assessing the Impact of Liquidity and Profitability Ratios on Growth of Profits in Pharmaceutical Firms in Nigeri

Abstract

This paper assesses the impact of liquidity and profitability ratios on growth of profits in Pharmaceutical firms in Nigeria. Eight ratios: acid test, current ratio, net working Capital. Return on assets, returns on capital employed, returns on equity, gross profit ratio and net profit ratio were regressed against the dependent variable growth of profit. Haussmann test was conducted to choose between Fixed Effect and Random Effects model. Results justified the use of Fixed Effect model. Test results indicate significant contributions of all the variables to profit growth of pharmaceutical companies in Nigeria implying that continued improvement in the variables can lead to increases in growth of profit by the Pharmaceutical firms.

Keywords: Growth of Profit, Liquidity, Profitability, Return on Assets, Return on Capital Employed, Return on Equity, Working capital.


Article Review Status: Published

Pages: 97-114 (Download PDF)

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