Investigating the Relationship between Growth Rate and Profitability of Food Industry Companies in Tehran Stock Exchange

Abstract

Increasing attention to the food industry and the entry of companies active in this field in the stock market is one of the most important factors influencing private sector investment and foreign investors, which will increase profitability, added value and growth in the agricultural sector. Therefore, the entry of food industry companies in the stock market can help to orient investors in the capital market of the agricultural sector. In this study, an attempt is made to determine the relationship between growth and profitability of the entire industry and the three food industry sub-industries of the stock exchange. The relationship between growth (asset growth rate, sales growth rate and employment growth rate) and financial constraints (liquidity and cash flow) on the profitability of the entire food industry of the stock exchange during the years 1389 to 1398 was examined for 21 stock exchange companies . The results show that the variables of employment growth rate, asset growth rate and sales growth rate as corporate growth variables and cash flow variable as financial constraint have a positive and significant effect on asset return variable as corporate profitability index. Food industry companies have stock exchanges. On the other hand, the liquidity variable as a financial constraint has a negative and significant effect on the profitability of the companies under study. Therefore, if managers are looking for sustainable profits, they should also pay attention to the growth of the company and its constituents.