Study on Multidimensionsal Aspects of Profitability: Evidence from Larsen & Toubro Ltd

Abstract

The term profitability represents to the ability of an organization to obtain sufficient profit. Profitability is connected to the efficiency of an organization to maximize the profit and wealth at reasonable rate. It is relative measure of the success of the organization in terms of the effective utilization of resources. Scientific study of current trade provides a platform to forecast the possible future trends of the profitability strategic managerial decisions like expansion of the business, rising of additional finance, issue related to bonus and dividend directly connected with profit. To analyze the profitability, the researcher used profitability ratios to determine the earning by considering the variables like EBIT, Gross contribution, Net sales, operating cash flow, ROA, Capital employed, Shareholders equity are considered in the study. An appropriate statistical tools like regression analysis has been employed to measure the relationship between profitability and productivity, which predict the growth of an organization in monetary value during the study period. The researcher made an attempt to measure the profitability of L&T a leading private infrastructure company in India. The researcher made an attempt to measure the profitability of L&T a leading private infrastructure company in India. The study has analyzed the profitability of L&T. Profit being a crucial measure to determine the performance in profitability, internal determinants of the firms, earning power has been ascertained in the study by applying a multiple regression model with EBIT as dependent variable and internal data inputs has independent variable s namely operating profit margin ratio, net profit margin ratio, return on capital employed, return on net worth ratio, return on total assets, operating cash flow to total asset, EBIT to total tangible asset, profit after tax to total tangible assets, EBIT to total assets, retained cash flow to capital employed, EBIT to capital employed, PAT to tangible portion of shareholders equity, interest coverage ratio.