More evidences of relationship among capital expenditure, fixed asset and inventory on firm profitability
Abstract
Future Earning Maximization is the most important consideration of each corporation. The very main objective of this study is to give out more evidence to displaying the relationship between Fixed Assets, Inventory and Capital Expenditure with organizational performance in Vietnam. The study avails three aforementioned components to describe for Independent Variables and Firm Profitability proxy by ROE, ROA, GPM and NPM. Applying panel data with 2608 observations during the period 2011-2015, the study has found empirical evidence that there is a significant negative relationship between Capex and profitability as well as an insignificant relationship between Inventory and Fixed Assets with profitability in model (1), proxy by ROE; there is an insignificant negative relationship between three explanatory and future earning ability in both model (2) and model (3) proxy by ROA and GPM, respectively; there is a significant negative relationship between Capex and Fixed Assets along with an insignificant negative relationship between Inventory with firm performance proxy by NPM. From this results, managers, Board of Directors or even minority shareholders could propose and conduct more efficient solution to reduce unnecessary cost and uplift corporate profitability.