FACTORS AFFECTING ON PROFITABILITY OF MANUFACTURING COMPANIES IN NEPAL

Abstract

This study investigates factors affecting on profitability of manufacturing companies in Nepal. Secondary data was gathered from manufacturing companies of Nepal for ten year periods (2013/14-2022/23). This study used correlation and multiple regression to analyze the data. The result shows that liquidity, size of companies, leverage, sales growth and tangibility are important factors affecting the profitability of manufacturing companies in Nepal. UNL has the strong profitability position. UNL could manage their overall operations and this company is able to make highest return to its assets by optimum utilization of the asset. The correlation analysis shows that liquidity and sales growth have insignificant positive relationship with profitability (ROA and ROE) of manufacturing companies. Then, size of companies has insignificant negative association with ROA and significant positive relationship with ROE. At the meantime, leverage has significant negative relationship with ROA and ROE. Moreover, tangibility (TANG) has significant negative relationship with profitability ROA and insignificant negative relationship with ROE of the manufacturing companies. The multiple regression also reveals that liquidity, size of companies, leverage and tangibility have significant negative effect on profitability (ROA and ROE) of the sample manufacturing companies in Nepal whereas sales growth has positive and significant impact on profitability (ROA and ROE) of manufacturing companies. Hence, this study concluded that all the independent variables have significant impact on profitability of the companies.