The Effect of Sales Growth Rate, Inventory Turnover Rate and Growth Opportunities on Profitability

Abstract

The purpose of this study is to investigate the effect of sales growth rate, inventory turnover ratio and growth opportunities on company profitability (return on assets, net profit margin, return on equity) in manufacturing companies listed in Tehran Stock Exchange. To achieve this goal, the financial information of a sample of 171 companies admitted to the Tehran Stock Exchange between 2014 and 2022 were selected and analyzed by systematic elimination method. Multiple regression was used to analyze the data. The findings of this research show that the sales growth rate has a positive and significant relationship with the profitability of the company. Growth opportunities in the return on assets and net profit margin models do not have a significant relationship with the company's profitability, but in the return on equity model, they have a positive and significant relationship with the company's profitability. Inventory turnover also has an inverse and significant relationship with company profitability in all three profitability models.