Indian Journal of Science and Technology

Abstract

This paper investigates the relationship between the management efficiency and the firms profitability for a sample of 13 auto manufacturing companies listed on the Bombay Stock Exchange, located in Pune for the period of 5 yrs from 2006 to 2010. Management efficiency is an important component of corporate financial management because it directly affects the profitability of the firms. Considering the importance of profitability for the survival of a business and the role of efficient management to achieve this aim, this paper explores the relationship between management efficiency and profitability in Automobile Industry of India. For this purpose, 13 auto manufacturing companies are located in Pune were chosen as the sample. The analysis is carried out using Minitab 14 and conducting Pearson Coefficient correlation test on variables of the study including Gross Profit Ratio (GPR) and Assets Turnover Ratio (ATR).The central conclusion of the study is that profitability and management efficiency are highly correlated to each other and based on the results of the study recommendations for improving the management efficiency and profitability in this industry are suggested.
Keywords: Management efficiency, profitability, automobile Industry, asset turnover ratio, gross profit Ratio