About the eBook
The study of assets and liabilities of the balance sheet and the profit/loss account of business corporations provides a good many answers to a variety of questions. They, in particular, indicate the financial position and their ability to thrive in business. The size and growth of corporations, their viability in business is quite revealed in their balance sheet and profit/loss account published periodically. A private enterprise in a capitalistic society aims not only at maximization of profit but also maximizing profitability, i.e., raising the ratio of profit to the resources employed or net sales of corporations. The present work “effect of size on profitability…” is an attempt to disclose the relationship of profitability of corporation with their size. The study covers a period from 1986-87 to 1995-96. The balance sheet and profit/loss account of 230 Indian manufacturing firms have been studied for the said period by classifying the corporations into four size groups-Giants, Larges, Mediums and smalls. profitability ratios of corporations of varying sizes have been calculated for both the pre- and post-liberalization period. The study, thus, seeks to find out answers to questions like--Is profitability of the concern directly related to their sizes? Does the higher sized firm have the tendency to increase the rate of profit at a faster rate than the lower sized firms? Is it profitable for share holders to invest capital in higher sized firms? Has the policy of liberalization any positive impact on the profitability of the concerns? Which size category of firms are most affected and which one least affected by the policy of liberalization? The study, thus, intends to find out not only size-profitability linkages, but also it reveals whether any general pattern exists with regard to liberalization effect on profits of concerns of varying size groups.
