Impact of Firm’s Size on Profitability: Evidence from Beverage and Tobacco Industry in India

Abstract

The size-wise categorization gives closer insight on to the impact of size on influencing the profitability of firms. The study is attempted with the objective of analyzing the predictor variables influencing the profitability and to estimate the variation if any in terms of size of Beverage and Tobacco firms in India based on sales. Regression analysis has been used for analysis. The study proves that more specifically, capital intensity and aggressive investment policy are the major predictor variables of profitability in case of small size firms. However, growth has significant negative coefficient on profitability showing their inefficiency to use the assets for productive purpose. The mediums size firms, on the other hand show that capital intensity has a significant positive coefficient on profitability. Further, the size is the main predictor variable influencing the profitability of large size
firms proving that increase in turnover has correspondingly increased their profit margin unlike the case of medium size firms.