Impact of Inventory Management on Operating Profits: Evidence from India

Abstract

The study has been undertaken to ascertain whether Inventory management influences the Operating Profits of the sample companies or not. In order to achieve this objective, the researchers have taken under study pharmaceutical industry which is represented by four major companies. A reference period of eight years from 2009-2010 to 2016-2017 has been taken into consideration. The researchers employed Regression Analysis and Analysis of Varience to arrive at some dependable conclusion. The results put forth by the study strongly affirm that independent variable (Inventory Turnover Ratio) does not impact the dependable Variable (Operating Profits) statistically in a significant way, thereby, accepting the null hypothesis that there exists statistically no significant impact of inventory turnover ratio on the operating profits. The study corroborates the findings of Roumiantsev and Netessine [1], Suleman Bawa et.al. [2], and Umar [3]. These studies also established that inventory management does not influence the profitability of the firm in any significant way.