Impact of Operating and Financial Expenses on Sales Revenue: The Case of Fauji Fertilizer Company Limited

Abstract

This paper is the first attempt to study the impact of operating and financial expenses on sales revenue of the Fauji Fertilizer Company Limited in Pakistan and to seek the nature as well as the strength of the relationship between sales and these expenses. The time series data for fourteen years covering 2002-2015 used were analyzed by using the Ordinary Least Square technique and a multiple regression model. These were supplemented with the elasticity and causality tests. The major findings established that there is a substantial relationship between operating expenses and sales revenue of the company, however; the relationship between financial expenses and sales revenue is not so strong comparatively. The results also confirmed that there is a significant increase in the sales revenue of the company caused by a unit change in operating expenses. It was suggested that the company should make aware the customers through advertising and general publicity on the uses and benefits of their multi-products produced. The more increase in expenses on operational aspects over the financial expenses was recommended in the future for the company in this study.