Research and Social practices in Social Sciences Vol. 7, No.

2 (February 2012) 44-58

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The Impact of Liquidity on Profitability: A Case Study of FMCG Companies in India

Amalendu Bhunia* University of Kalyani, West Bengal Bhaskar Bagchi** Alipurduar College, West Bengal Basanta Khamrui** Alipurduar College, West Bengal

Abstract This paper examines the impact of liquidity on profitability of the FMCG companies in India. The FMCG industry has emerged as one of the largest sectors in the Indian economy by registering an astonishing double-digit growth rate in sales in the past couple of years. The study is based on secondary data collected from CMIE database for the period from 2001 to 2010. In the course of analysis, normality test, descriptive statistics, correlation statistics and linear regressions have been used for the study. The results show that there are relationships exist between variables of the liquidity management and profitability of the firm.

Keywords: Profitability-Liquidity Trade-Off, FMCG Companies, Financial Ratios, Multiple Regression.

(*Amalendu Bhunia, Associate Professor, Department of Commerce, University of Kalyani, West Bengal, India, Email: bhunia.amalendu@gmail.com ** Bhaskar Bagchi & Basanta Khamrui, Assistant Professor in Commerce, Alipurduar College, West Bengal, India) 44

Research and Social practices in Social Sciences Vol. 7, No. 2 (February 2012) 44-58 Introduction

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Working capital management is vital fraction in firm financial management decision. Management of working capital has profitability and liquidity implications. That is why; working capital proposes a familiar front for profitability and liquidity management. To reach optimal working capital management firm manager should control the trade off between profitability and liquidity accurately. An optimal working capital management is expected to contribute positively to the creation of firm value.

The crucial part in managing working capital is required maintaining its liquidity in day-today operation to ensure its smooth running and meets its obligation (Eljelly, 2004). Liquidity plays a significant role in the successful functioning of a business firm. A firm should ensure that it does not suffer from lack-of or excess liquidity to meet its short-term compulsions. A study of liquidity is of major importance to both the internal and the external analysts because of its close relationship with day-to-day operations of a business (Bhunia, 2010). Dilemma in liquidity management is to achieve desired trade off between liquidity and profitability (Raheman et all, 2007). Referring to theory of risk and return, investment with more risk will result to more return. Thus, firms with high liquidity of working capital may have low risk then low profitability. Conversely, firm that has low liquidity of working capital, facing high risk results to high profitability. The issue here is in managing working capital, firm must take into consideration all the items in both accounts and try to balance the risk and return (Lee et all, 2008).

The FMCG industry has emerged as one of the largest sectors in the Indian economy by registering an astonishing double-digit growth rate in sales in the past couple of years. Characterized by healthy distribution network, strong MNC presence, intense competition between the organized and the unorganized segments and low operational costs, it is one of the rapid growing industries in India with a total market size US $13.1 billion (CMIE, 2011). But the production capacity and growth rate in the FMCG Company did not increase promptly due to poor financial management in terms of liquidity and profitability. This call for a full diagnosis of the malady, that is identification, analysis and quantification of the interfering constraints in achieving full utilisation of the capacities, thus opens a vast field for research and enquiry. In the present study, therefore; an attempt has been made to examine

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and evaluate the liquidity-profitability trade-off of the FMCG companies as a factor accountable for poor performance in the FMCG sector in India.

Literature Survey In spite of such a greatcoat of liquidity-profitability trade-off, it is strange that so long it could not draw towards as much mindfulness of the researchers in India as it desires. A brief review of the different pains of research in the field is attempted in the following paragraphs. Agarwal (1988) devised the working capital decision as a goal programming problem, giving primary importance to liquidity, by targeting the current ratio and quick ratio. The model included three liquidity goals, two profitability goals, and, at a lower priority level, four current asset sub-goals and a current liability sub-goal (for each component of working capital). In particular, the profitability constraints were designed to capture the opportunity cost of excess liquidity (in terms of reduced profitability).

Garcia-Teruel and Martinez-Solano (2007) studied the effects of working capital management on the profitability of a sample of small and medium-sized Spanish firms. They found that managers can create value by reducing their inventories and the number of days for which their accounts are outstanding. Moreover, shortening the cash conversion cycle also improves the firm's profitability. Chakraborty (2008) evaluated the relationship between working capital and profitability of Indian pharmaceutical companies. He pointed out that there were two distinct schools of thought on this issue: according to one school of thought, working capital is not a factor of improving profitability and there may be a negative relationship between them, while according to the other school of thought, investment in working capital plays a vital role to improve corporate profitability, and unless there is a minimum level of investment of working capital, output and sales cannot be maintained - in fact, the inadequacy of working capital would keep fixed asset inoperative.

Mathuva (2009) examined the influence of working capital management components on corporate profitability by using a sample of 30 firms listed on the Nairobi Stock Exchange (NSE) for the periods 1993 to 2008. He used Pearson and Spearmans correlations, the pooled ordinary least square (OLS), and the fixed effects regression models to conduct data analysis. The key findings of his study were that: i) there exists a highly significant negative relationship between the time it takes for firms to collect cash from their customers (accounts 46

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collection period) and profitability, ii) there exists a highly significant positive relationship between the period taken to convert inventories into sales (the inventory conversion period) and profitability, and iii) there exists a highly significant positive relationship between the time it takes the firm to pay its creditors (average payment period) and profitability. The conclusive sum of this retrospective review of relevant literature produced till date on the offered subject reveals wide room for the validity and originates of this work and reflects some decisive evidences that affirm its viability, as may be marked here it. Nor has any previous research examined the liquidity-profitability trade-off of FMCG companies in India.

Objectives of the Study Keeping in view the importance of FMCG sector in Indias economic growth scenario, the study generally aims at evaluating the profitability and liquidity management performance of two leading FMCG companies (Hindustan Unilever Limited and Dabur India), over a period of 10 years (2000-01 to 2009-10). More specifically it seeks to dwells upon mainly the following issues: i. To observe the liquidity position and area of weaknesses, if any, of the selected companies under the study; ii. iii. To explore the liquidity-profitability trade-off; To make some suggestions and specific recommendations for improvement of the liquidity management.

Hypotheses of the Study The following hypotheses were taken for the study: Hypothesis-1 H0: Liquidity position has no impact on profitability. H1: Liquidity position has a significant impact on profitability. Hypothesis 2 H0: Solvency position has no impact on Profitability. H1: Solvency position has a significant impact on Profitability. Hypothesis-3 H0: There is no relationship exists between liquidity and profitability. H1: There is a significant relationship exists between liquidity and profitability.

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Research and Social practices in Social Sciences Vol. 7, No. 2 (February 2012) 44-58 Materials and Methods Data Source

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The data utilized in this study is extracted from the income statements, balance sheets, and cash flow statements of sampled firms attained from the Companies Annual Report accessible from the Indian Stock Exchange and CMIE database. The purposive sample design method was applied in this analysis. Preferred samples of FMCG companies from the year of 2001 to 2010 were utilized in this analysis. The used of a preferred sample of selected companies might introduce a potential firms success bias (Bhunia, 2010). It is claimed that the potential for success is overstated using this technique. However, it is worried that the bias may or may not be important depending on the usage of the model. If the model is used to rank the firms for the potential success in order to perform a more detailed analysis, then the bias is not important. However, if the model is used to identify investment portfolio selection, then the bias is significant. A total of two leading companies were identified during the year of determination. Table 1, below, disclosed the name of successful firms.

Selected Variables The dependent variable is defined as the profitability of the sample firms. The independent variable is interpreted as the commonly used financial ratios. The ratios used are chosen from those utilized by Bhunia (2010), Refuse (1996) and Singh et all (2008). An itemized listing of the variables is accessible in table 2.

Normality Tests Before the multiple regression analysis, normality test was carried out to all independent variables. Two generally utilized tests are the Shapiro-Wilks test and Lillifors test. The Shapiro-Wilks test shows better tools in many statistical conditions correlated to other tests of normality. Anyhow, the Shapiro-Wilks test is well suited to small-size samples. The null hypothesis will be rejected for large values of Kolgomorov Smirnov D statistics. According to Norusis (1993), it is almost impossible to find data that are exactly normally distributed, he advised that for most statistic tests, it is adequate that the data are approximately normally distributed.

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Table 3 above, disclosed the Kolgomorov Smirnov tests (altered for Lillifors). All the variables are almost normal out of seven variables were tested. Accordingly, we exclude the hypothesis null that all of the financial ratios examined are normally distributed. In order to enhance the normality, data transformation processes (natural Log, Square Root, Square and Inverse. Natural logs and square roots) may be implemented. But in this study, only descriptive statistics and multiple regression analysis were utilized.

Descriptive Statistics The results of various independent variables have been used for making descriptive statistical analysis. To make the analysis and interpretation more precise and accurate, the values of A.M., S.D., C.V., maximum, minimum, Skewness and Kurtosis have been computed from the ratios and the selected eight ratios which are depicted below in Table-4 and Table-5.

Table-4: Descriptive statistics of HUL Variables N Maximum Minimum Mean S.D. C.V. (%) Skewness Kurtosis CR 10 1.57 0.96 1.29 0.23 0.05 -0.12 -1.79 QR 10 1.05 0.45 0.78 0.19 0.039 -0.08 -0.98 SQR 10 0.42 0.05 0.26 0.12 .016 -0.53 -1.20 DER 10 0.80 0.01 0.19 0.30 .090 1.68 1.27 ICR 10 8.11 4.32 6.77 1.22 -0.74 0.12 ITR 10 8.01 3.99 6.27 1.32 -0.84 -0.13 DTR 10 4.01 2.51 3.27 0.52 0.28 -1.08 CTR 10 6.01 3.88 4.98 0.70 0.03

Table-5: Descriptive statistics of DIL Variables N Maximum Minimum Mean S.D. C.V. (%) Skewness Kurtosis CR 10 3.63 1.21 2.39 0.79 0.63 0.09 -1.02 QR 10 2.41 0.67 1.59 0.58 0.33 -0.231 -1.09 SQR 10 0.43 0.04 0.21 0.12 0.01 0.54 0.23 DER 10 0.56 0.03 0.21 0.19 0.04 1.21 0.27 ICR 10 8.01 2.94 4.67 1.53 1.09 1.45 ITR 10 6.71 3.31 5.16 0.91 -0.35 1.43 DTR 10 6.81 2.98 4.67 1.20 0.42 -0.37 CTR 10 4.01 1.79 2.94 0.74 -0.05 -0.62

Tables 4 and 5 showed that liquidity position (CR, QR and SQR) of DIL is higher than HUL during the period of study. Coefficient of variation of CR, QR and SQR of HUL is lower than DIL. In the matter of the management of liquidity, it also shows consistency during the study period of both the companies. Greater variability indicates improper or less efficient 49

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management of fund inasmuch as the excess liquidity could have otherwise been used for investment purposes thereby enabling the company to lead a path of growth. Solvency ratios (DER and ICR) indicate both the companies are able to meet their matured current obligations in every year under the study period. Again, coefficient of variation indicates less consistency and thus, the companies under study not only depends upon short-term outsiders but also very dependent on the long-term sources. However, inventory management of HUL is far better than DIL. Management of credit and collection policy of DIL is better than HUL and payables management of HUL is more satisfactory than DIL.

Correlation Statistics Correlation coefficient is computed from liquidity and profitability ratios derived from tenyear financial statements of the selected quoted companies and CMIE database. The coefficient gives an insight into the nature and extent of the relationship. Pearson productmoment correlation coefficient or "Pearson's correlation." is obtained by dividing the covariance of the two variables by the product of their standard deviations. The Pearsons correlation coefficient r is defined as: N xy - (x) (y) r = ------------------------------------------------- (Karl Pearsons correlation formula) (N x2 (x)2 ) (N y2 (y)2) The Pearsons correlation is defined only if both of the standard deviations are finite and both of them are nonzero. It is a corollary of the CauchySchwarz inequality that the correlation cannot exceed 1 in absolute value. Table-4 and Table-5 represents the correlation statistics of both the selected firms. Pearsons Correlation analysis has been used to see the relationship between liquidity management and profitability. If efficient liquidity management increases profitability, one should expect a negative relationship between the measures of liquidity management and profitability variable and vice versa. Table 4 reveals that correlation statistics of HUL have been positive in all the cases and it has been significant at 1% level. Again, correlation statistics of DIL have been positive and negative and it has also been significant at 1% level.

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Research and Social practices in Social Sciences Vol. 7, No. 2 (February 2012) 44-58 Multiple Regression Statistics

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In this section an attempt has been made to examine composite impact of liquidity indicators on profitability through the sophisticated statistical techniques. Accordingly, multiple regression techniques have been applied to study the joint influence of the selected ratios indicating company's liquidity position and performance on the profitability and the regression coefficients have been tested with the help of the most popular t test. In this study, current ratio (CR), quick ratio (QR), super quick ratio (SQR), debt-equity ratio (DER), interest coverage ratio (ICR), inventory turnover ratio(ITR), debtors turnover ratio (DTR) and creditors turnover ratio (CTR) have been taken as the explanatory variables and ROIR has been used as the dependent variable. The regression model used in this analysis is: ROI = + 1CR + 2 QR + 3 SQR + 4 DER + 5 ICR + 6 ITR + 7 DTR + 7 CTR + t (unexplained variables or error terms) (1) Where , 1, 2, 3, 4, 5, 6, 7 and 8 are the linear parameters of the ROI line.

Empirical Results and Analysis Liquidity-profitability relationship is linked with the continuance of the appropriate intensity of working capital. This concept tries to strike a level of liquidity that offers a relaxed balance of liquidity and profitability, that is to say, the investment of the company in working capital must be sufficient. It may generally be assumed that there is always a negative relationship between the two. But it is not true in all the cases. The existence of a linear relationship, though not continuous, between profitability and liquidity corresponding to the holding of current assets at least up to a certain level by firms, is not an impracticable proposition. To study the mutual disparities of these relationships, multiple correlation and multiple regression analysis have been taking up. In order to evaluate the association between the liquidity and profitability of selected FMCG companies in India in detail with the help of above-mentioned measures at a time, we sketched them in the paragraphs that follow.

Joint Impact of Liquidity Indicators on Profitability of HUL Multiple correlation and multiple regression analysis of HUL have been tabulated in Table 6. Stepwise regressions have been done and on this way CR, QR and CTR have been removed from the final equation.

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The strength of the relationship between the dependent variable, ROIR and all the independent variables taken together and the impact of these independent variables on the profitability are given in Table 6. It was observed from the above that an increase in SQR by one unit; the ROIR decreased by 90.559 units that were statistically significant at 1 per cent level. When DER increased by one unit, the ROIR decreased by 110.790 units, which was statistically significant at 1 per cent level. However, when ICR increased by one unit, the ROIR of the company decreased by 3.361 units though the influence of ICR on ROIR was very significant. However, when ITR increased by one unit, the ROIR of the company increased by 5.250 units though the influence of ITR on ROIR was very significant. Again, DTR increased by one unit, ROIR increased by 59.537 units which was statistically at 1 per cent level.

The multiple correlation coefficient between the dependent variable ROIR and the independent variables taken together was 0.792. It indicates that the profitability was highly responded by its liquidity indicators. It is also evident from the value of R2 that 62.7 per cent of variation in ROIR was accounted by the joint variation in SQR, DER, ICR, ITR and DTR. The Durbin Watson of 1.787 shows that there is presence of positive serial correlation among the variables.

Joint Impact of Liquidity Indicators on Profitability of DIL Multiple correlation and multiple regression analysis of DIL have been tabulated in Table 7. Stepwise regressions have been done and on this way CR, QR and CTR have been removed from the final equation.

The strength of the relationship between the dependent variable, ROIR and all the independent variables taken together and the impact of these independent variables on the profitability are given in Table 6. It was observed from the above that an increase in SQR by one unit; the ROIR decreased by 52.106 units that were statistically significant at 1 per cent level. When DER increased by one unit, the ROIR decreased by 88.942 units, which was statistically significant at 1 per cent level. However, when ICR increased by one unit, the ROIR of DIL increased by 0.253 units though the influence of ICR on ROIR was very significant. However, when ITR increased by one unit, the ROIR of the company increased

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by 6.619 units and DTR increased by one unit, ROIR increased by 5.529 units which was statistically at 1 per cent level.

The multiple correlation coefficient between the dependent variable ROIR and the independent variables taken together was 0.992. It indicates that the profitability was highly responded by its liquidity indicators. It is also evident from the value of R2 that 98.5 per cent of variation in ROIR was accounted by the joint variation in SQR, DER, ICR, ITR and DTR. The Durbin Watson of 2.633 show that there is presence of positive serial correlation among the variables.

6. Test of Hypotheses A hypothesis is an assumption to be tested. The statistical testing of hypothesis is the important technique in statistical inference. Hypothesis tests are widely used in business and industry for making decisions. The following are the hypotheses framed and tested using test of significance at 5% level of significance.

Hypothesis 1 H0: Liquidity position has no impact on Profitability. H1: Liquidity position has a significant impact on Profitability.
T-test Results of Hypothesis 1 CR, QR and SQR ROIR N 4 4 Mean 0.9127 34.2538 T-test Results Test Value=0 t CR, QR and SQR ROIR df Sig (2-tailed) Mean difference 0.82547 35.74985 95% Confidence Interval of the Difference Lower Upper 0.1728 -51.487 1.5716 130.296 S.D. 0.9736 109.3687 S.E. of Mean 0.3482 35.1697

2.618 0.932

3 3

0.031 0.394

The calculated value of t is more than the significant value, hence null hypotheses is not accepted.

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Research and Social practices in Social Sciences Vol. 7, No. 2 (February 2012) 44-58 Hypothesis 2 H0: Solvency position has no impact on Profitability. H1: Solvency position has a significant impact on Profitability.
T-test Results of Hypothesis 2 DER and ICR ROIR N 4 4 Mean -0.6587 36.1895 T-test Results t df Test Value=0 Sig (2-tailed) Mean difference 0.295 0.412 -0.07547 36.00154 S.D. 0.32452 124.59847

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S.E. of Mean 0.06852 40.19323

DER ICR ROIR

and

1.0068 0.9775

3 3

95% Confidence Interval of the Difference Lower Upper -0.1187 0.6254 -51.487 109.2567

The calculated value of t is more than the significant value, hence null hypotheses is not accepted.

Hypothesis 3 H0: There is no relationship exists between liquidity and profitability. H1: There is a significant relationship exists between liquidity and profitability.

T-test Results t df Test Value=0 Sig (2-tailed) Mean difference 95% Confidence Interval of the Difference Lower Upper 0.1819 0.3892

CR, QR, SQR, DER ICR, ITR DTR, CTR ROIR

6.982

0.005

0.3660

6.879

0.000

70.8770

47.5702

94.1838

The calculated value of t is more than the significant value, hence null hypotheses is not accepted.

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Research and Social practices in Social Sciences Vol. 7, No. 2 (February 2012) 44-58 7. Suggestions and Recommendations

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This is the ultimate stage in which several proposals and suggestions have been offer; to overcome the noticeable problems in the study. In order to solve the problems relating to the study of liquidity management, a lot of modifications are necessary. Overall inventory management is required to be progressed in case of DIL by way of proper application of inventory control system, such as, EOQ, JIT, ABC analysis, etc. and improvement of their sales management so as to reduce stock piling of finished goods. On the whole, receivable management is not good enough in case of the DIL under the study. Solution to the enormous problem of receivables management, an effective professional co-ordination between sales, production and finance departments is called for. On time billing, timely reminders to defaulting customers and immediate action should be ensured. The investment in loans and advances should be minimised to the extent possible. Multiple correlation indicates that there is high relationship exists between liquidity and profitability in both the selected FMCG companies under the study.

Conclusions Working capital management is important part in firm financial management decision. The optimal of working capital management is could be achieve by firm that manage the trade off between profitability and liquidity. The purpose of this study is to investigate the liquidity management efficiency and liquidity-profitability relationship. Results of this study found that correlation and regression results are significantly positive associated to the firm profitability. Thus, firm manger should concern on inventory and receivables in purpose of creation shareholder wealth.

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Research and Social practices in Social Sciences Vol. 7, No. 2 (February 2012) 44-58 Limitations of the Study The study suffers from certain limitations which are mentioned below. 1.

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As the study is purely based on two leading FMCG companies, so the results of the

study are only indicative and not conclusive. 2. Accounting ratios used in the study are taken from CMIE data base.

References Agarwal, J.D. (1988). A goal programming model for working capital management, Finance India, Vol. 2, Issue 2., pp. 49-61. Bhunia, A (2010). A trend analysis of liquidity management efficiency in selected private sector indian steel industry, International Journal of Research in Commerce and Management, Volume-1 Issue-5 (Sep, 2010), pp. 9-21. Chakraborty, K. (2008). Working Capital and Profitability: An Empirical Analysis of Their Relationship with Reference to Selected Companies in the Indian Pharmaceutical Industry, The Icfai Journal of Management Research, Vol. 34, pp. 112-126. Eljelly, A. (2004), Liquidity-Profitability Tradeoff: An empirical Investigation in an Emerging Market, International Journal of Commerce & Management, Vol. 14 No 2 pp. 48 61. Garcia-Teruel, P.J. and Martinez-Solano, P. (2007). Effects of working capital management on SME profitability, International Journal of Managerial Finance, Vol.3, Issue 2, pp. 35-51. Lee, A.H.I. and Kang, H.-Y. (2008). A mixed 0-1 integer programming for inventory model: A case study of TFT-LCD manufacturing company in Taiwan, Kybernetes, Vol. 37, Issue 1, pp. 58-76. Singh, J.P. and Pandey, S. (2008), Impact of Working Capital Management in the Profitability of Hindalco Industries Limited, The ICFAI University Journal of Financial Economics, Vol. 36, pp. 64-79. Rafuse, M.E. (1996), Working Capital Management: An Urgent Need to Refocus, Management Decision, Vol. 34, Issue 2, pp. 78-96. Raheman, A. & Nasr, M. (2007). Working capital management and profitability case of Pakistani firms. International Review of Business Research Papers, Vol. 3 No. 1. pp. 279-300.

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Table-1: Name of Leading FMCG Companies No. 1. 2. Name of the FMCG companies Hindustan Unilever Limited (HUL) Dabur India Limited (DIL)

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Table-2: Selected Variables Sl. No. 1. 2. 3. 4. 5. 6. 7. 8. Independent variables Current Ratio (CR) Quick Ratio (QR) Super Quick Ratio (SQR) Debt-Equity Ratio (DER) Interest Coverage Ratio (ICR) Inventory Turnover Ratio (ITR) Debtors Turnover Ratio (DTR) Creditors Turnover Ratio (CTR) Sl. No. Dependent variable

1.

Return on Investment (ROIR)

Ratio

Table-3: Raw Data of Normality Tests Variables 1. 2. 3. 4. 5. 6. 7. 8. Details Current ratio Quick ratio Super Quick ratio Debt-Equity ratio Interest Coverage ratio Age of inventory Age of Debtors Age of Creditors Shape Skewness 0.81 0.47 0.04 1.33 1.38 0.41 0.20 0.74 Kurtosis 0.42 0.62 0.24 1.34 1.39 0.19 0.19 0.87 Normality Test Stat. 0.26 0.17 0.24 0.13 0.18 0.25 0.40 0.22 Sig 0 0 0 0 0 0 0 0

Table-4: Correlation Statistics of HUL Variables CR QR CR QR SQR DTR ICR ITR 1 0.979** 1 (0.000) SQR 0.794** 0.823 ** 1 (0.006) (0.003) DTR 0.429 0.354 0.178 1 (0.216) (0.315) (0.623) ICR 0.535 0.604 0.734* 0.372 1 (0.111) (0.064) (0.016) (0.290) ITR 0.387 0.350 0.504 0.504 0.417 1 (0.269) (0.321) (0.137) (0.137) (0.231) DTR 0.430 0.313 0.333 0.717* 0.298 0.506 (0.215) (0.379) (0.348) (0.020) (0.403) (0.135) CTR 0.507 0.336 0.306 0.584 0.088 0.552 (0.135) (0.342) (0.390) (0.076) (0.808) (0.098) ** Correlation is significant at the 0.01 level (2-tailed). () denotes significance. * Correlation is significant at the 0.05 level (2-tailed). Table-5: Correlation Statistics of Dabur India Variables CR QR CR 1 0.970** QR 1 SQR DTR ICR ITR DTR CTR DTR CTR

1 0.765** (0.010) 1

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(0.000) 0.550 0.690* 1 (0.00) (0.027) DTR 0.776** 0.629 -0.013 1 (0.008) (0.052) (0.970) ICR -0.281 -0.188 0.079 -0.390 1 (0.432) (0.603) (0.828) (0.265) ITR -0.179 -0.054 0.137 -0.148 0.195 1 (0.621) (0.882) (0.706) (0.681) (0.590) DTR 0.008 -0.113 -0.561 0.407 -0.266 -0.130 (0.981) (0.756) (0.091) (0.243) (0.458) (0.721) CTR 0.126 0.011 -0.091 0.210 -0.329 -0.589 (0.726) (0.976) (0.802) (0.561) (0.353) (0.073) ** Correlation is significant at the 0.01 level (2-tailed). () denotes significance. * Correlation is significant at the 0.05 level (2-tailed). SQR

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1 0.581 (0.078) 1

Table-6: Multiple Correlation and Multiple Regression Analysis of HUL Model Unstandardised Ccoefficients B S.E. Constant -88.474 128.946 SQR -90.559 134.505 DER -110.790 55.494 ICR -3.361 13.394 ITR 5.250 10.120 DTR 59.537 29.778 a. Dependent variable: ROIR t -0.686 -0.673 -1.996 -0.251 0.519 1.999 Sig. 0.530 0.538 0.117 0.814 0.631 0.116 Collinearity Statistics Tolerance VIF 0.530 0.556 0.571 0.756 0.610 1.830 1.610 1.498 1.098 1.441

Model Summary Model R R Adjusted R2 1 0.792 0.627 0.160 b. Predictors: (constant), DTR, ITR, ICR, DER, SQR c. Dependent variable: ROIR
2

SEE 29.85241

Durbin-Watson 1.787

Table-7: Multiple Correlation and Multiple Regression Analysis of DIL Model Unstandardised Ccoefficients B S.E. Constant -3.699 25.883 SQR -52.106 29.104 DER -88.942 17.276 ICR 0.253 1.985 ITR 6.619 3.098 DTR 5.529 5.179 a. Dependent variable: ROIR t -0.143 -0.673 -1.996 -0.251 0.519 1.999 Sig. 0.530 1.790 -5.148 0.127 2.136 1.068 Collinearity Statistics Tolerance VIF 0.621 0.688 0.817 0.940 0.520 1.610 1.453 1.224 1.063 1.924

Model Summary Model R R2 Adjusted R2 1 0.992 0.985 0.864 d. Predictors: (constant), DTR, ITR, ICR, DER, SQR e. Dependent variable: ROIR SEE 29.85241 Durbin-Watson 2.633

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