An empirical analysis of efficiency and profitability of US food processing companies Online publication date: Tue, 21-Feb-2023
by Nilesh Joshi
International Journal of Engineering Management and Economics (IJEME), Vol. 7, No. 1, 2022
Abstract: This study provides an overview of the US food industry, analyse historical trends in operational efficiencies and profitability metrics, and explore the relationship between these metrics for the US food companies. The research method is based on ratio analysis. The key efficiency ratios used are days sales outstanding (DSO), days inventory, payable period, and cash conversion cycle (CCC). Return on assets (ROA) is used as the key profitability ratio to assess the profitability of companies. Pearson correlation analysis is used to study the relationship between efficiency and profitability ratios. The findings show a wide performance range of efficiency ratios, but a general decreasing trend in CCC in studied companies which can be attributed to effective use of lean practices. Also, the correlation between efficiency and profitability is not as strong as initially envisioned. It is necessary to support quantitative analysis with a qualitative analysis of individual companies for more insights.
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