Implications of Various Macroeconomic and Firm-Specific Factors on the Financial Performance of the Select Indian Manufacturing Firms

Abstract

AbstractProfitability of the firm is considered as a prerequisite for value maximization and long-run survival. This chapter examines the profitability of the various firms across ten different sectors in the Indian manufacturing industry. Attempt was also made in this chapter to explore the various microeconomic and macroeconomic factors affecting firm-level profitability. Variation in the level of profitability among the different manufacturing sub-sectors was very much reflected from the outcome of the study. The analysis of the results of the study suggested that neither all the microeconomic and macroeconomic factors were significant nor the effect of such factors were uniform across the diverse sectors within the broad manufacturing industry. In aggregate, an all-embracing implication of inflation, leverage and intellectual capital efficiency in determining the profitability of the various manufacturing sub-sectors was noticed during the period of study.KeywordsManufacturingProfitabilityIntellectual capitalLeverageInflation