Investment in Fixed Assets and Firm Profitability: Evidence from the Nigerian Brewery Industry

Abstract

This study assesses the impact of a company's investment in fixed assets on its operating profit margin. The study is based on a sample four companies in the Nigerian brewery sector over an eleven year period from 1999 to 2009. We used regression statistical method to ascertain the relationship between level of investment in fixed assets and its impact on the operating profit reported by Nigerian brewery firms. Though the relationship is positive, but the result is not statistically significant. Therefore, the result did not suggest any strong positive impact of investment in fixed assets on the operating profit of brewery firms in Nigeria. This finding is in which is in line with past academic researches show that investment in fixed asset does not have any strong and statistical impact on the profitability of brewery firms in Nigeria.

Keywords: Operating profit, investment; fixed assets; brewery firms.