What influences the corporate profitability of retail and wholesale companies in selected European countries?

Proceedings of ‏The 7th International Conference on Opportunities and Challenges in Management, Economics and Accounting

Year: 2021

DOI:

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What influences the corporate profitability of retail and wholesale companies in selected European countries?

Nicole Škuláňová

 

ABSTRACT: 

With the emergence of the neoclassical economy, a today well-known basic economic rule emerged, namely that when companies decide on their production, its quantity, price, etc., they always try to maximize their profits. Each business unit plans to generate a profit, and therefore profitability indicators are also among the key performance indicators of each business. Like everything in life, the formation of profitability is influenced by a number of (un)predictable factors. This research deals with the factors that affect the company and its profitability from the outside, and therefore they are often unexpected. Business profitability is examined in eight European economies, namely the Visegrád Group, Austria, Bulgaria, Romania and Slovenia. The subject of the research is companies that fall into the retail and wholesale industry. This industry is analysed at the level of subindustries according to the NACE classification, of which there are a total of twenty-one. The aim of the research is to find out whether selected factors influence the company’s profitability or not. The factors are as follows – GDP growth rate, inflation rate, reference interest rate, unemployment rate, gross fixed capital formation and exchange rate against the Euro. The analysed period is from 2010 to 2018. In total, over 130,000 companies are examined. Given the size of the data set examined, it is impossible to summarize the results for each economy. However, the main finding is that corporate profitability is mainly affected by the reference interest rate of a given economy.

Keywords: corporate profitability, GDP, inflation, interest rate, unemployment, gross fixed capital formation.