Title: An empirical analysis of efficiency and profitability of US food processing companies

Authors: Nilesh Joshi

Addresses: Engineering and Technology Management, Morehead State University, 316C Lloyd Cassity Bldg, 4th St., Morehead, KY 40351, USA

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.

Keywords: efficiency ratios; profitability ratios; cash conversion cycle; CCC; correlation analysis; food processing industry; inventory turnover; asset turnover.

DOI: 10.1504/IJEME.2022.129128

International Journal of Engineering Management and Economics, 2022 Vol.7 No.1, pp.41 - 58

Received: 10 Jan 2022
Accepted: 25 Mar 2022
Published online: 21 Feb 2023 *

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