Organizational Profitability of Manufacturing Companies listed on the Ghana Stock Exchange

  • John Adu Kumi Presby University
  • Martin Amaniampong Presbyterian University College, Ghana
  • Mary Adu Kumi Presbyterian University College, Ghana,
Keywords: Profitability, financial management, liquidity, manufacturing companies, Ghana Stock Exchange

Abstract

Profitability is one of the most important objectives of financial management because one goal of financial management is to maximize the owner’s wealth. Hence profitability becomes very important determinant of company performance. The purpose of this study is to investigate the effect of corporate income tax and liquidity on profitability of manufacturing companies listed at the Ghana Stock Exchange. Profitability is the dependent variable while corporate income tax and liquidity are the independent variables. The sample in this study includes four listed manufacturing companies on the Ghana Stock Exchange for over five years.  Correlations of variables and regression analysis revealeda negative relationship between profitability of manufacturing companies and corporate income tax to show that corporate income tax has negative effect on company profitability. However, a positive and significant correlation was established between liquidity and profitability on manufacturing companies. Liquidity is positive and significant in predicting the profitability of manufacturing companies with p-value = 0.006. This implies that a unit increase in the company liquidity will lead to 0.006 increase in company profitability.

Downloads

Download data is not yet available.

References

[1] Goddard, J., Tavakoli, M., & Wilson, J. O. (2005). Determinants of profitability in European manufacturing and services: evidence from a dynamic panel model. Applied Financial Economics, 15(18), 1269-1282.
[2] Kattuman, P. A., Rodriguez, D., Sharapov, D., & Velazquez, F. J. (2011, January). Revisiting profitability: firm, business group, industry and country effects. In Academy of Management Proceedings Vol. 2011, No. 1, pp. 1-6. Briarcliff Manor, NY 10510: Academy of Management.
[3] Owolabi, S. A., &Obida, S. S. (2012). Liquidity management and corporate profitability: Case study of selected manufacturing companies listed on the Nigerian stock exchange. Business Management Dynamics, 2(2), 10-25. [4] Al-Jafari and Samman2015).
[5] Al-Jafari, M. K., & Al Samman, H. (2015). Determinants of profitability: evidence from industrial companies listed on Muscat Securities Market. Review of European Studies, 7(11), 303.
[6] Pratheepan, T. (2014). A Panel Data Analysis of Profitability Determinants: E] mpirical Results from Sri Lankan Manufacturing Companies. International Journal of Economics, Commerce and Management, 2(12).
[7] Moyer, R. C., Mcguigan, J. R., &Kretlow, W. J. (2003). Instructor's Manual-Contemporary financial management. Thomson/South-Western.

[8] Saghafi, A., &Aghaei, M. A. (1994). Behavior of Accounting Profits. Accounting and Auditing Review, 9, 5-21.

[9] McDonald, J. T. (1999). The determinants of firm profitability in Australian manufacturing. Economic Record, 75(2), 115-126.

[10] Badu, E. A. andAsiedu, M. K.(2013). The Relationship Between Working Capital Management and Profitablity of Listed Manufacturing Companies in Ghana. International Journal of Business and Social Research, 3(2), 25-34.
[11] Gatsi, J. G., Gadzo, S. G., &Kportorgbi, H. K. (2013). The effect of corporate income tax on financial performance of listed manufacturing firms in Ghana. Research Journal of Finance and Accounting, 4(15), 118-124. [11] Internal Revenue Act, 2000
[12] Sørensen, P. B. (1994). From the global income tax to the dual income tax: Recent tax reforms in the Nordic countries. International Tax and Public Finance, 1(1), 57-79.
[13] Akakpo, V. K.A. (2009). “Principles, Concepts and Practice of Taxation” (3rd ed).Accra: BlackMask Ltd.
[14] Bhunia, A. (2010). A trend analysis of liquidity management efficiency in selected private sector Indian steel industry. International Journal of research in commerce and management, 1(5), 618-628

[15] Raheman, A., & Nasr, M. (2007). Working capital management and profitability–case of Pakistani firms. International review of business research papers, 3(1), 279-300.

[16] Jens and Schwellnus (2008

[17] Kadapakkam, P. R., Kumar, P. C., & Riddick, L. A. (1998). The impact of cash flows and firm size on investment: The international evidence. Journal of banking & Finance, 22(3), 293-320.
Published
2019-08-14
How to Cite
Kumi, J. A., Martin Amaniampong, & Mary Adu Kumi. (2019). Organizational Profitability of Manufacturing Companies listed on the Ghana Stock Exchange. IJRDO - Journal of Business Management (ISSN: 2455-6661), 5(7), 64-72. Retrieved from https://ijrdo.org/index.php/bm/article/view/3137