Financial Ratios as a Tool for Profitability in Aryton Drugs

Abstract

This study is intended to evaluate the determinants of profitability in Ayton drugs. The study employed a causal design and secondary data sources were used and data was analyzed using statistical package. Correlation, regression analysis and financial ratio analysis was used. The p-test and f-test was calculated to show if the independent variables have significant relationship with the dependent variable. The research used the multiple linear regression method. The findings show that Aryton Drugs were not liquid enough and had return on assets were not utilized properly, have a serious problem in collecting debt from customers or less liquid debtors and their operations were financed more by debt. The study further revealed that liquidity had a positive and insignificant relationship with profitability while leverage and efficiency had a negative and insignificant relationship with profitability. The study recommends management of the Aryton Drugs to maintain a high debtor’s turnover ratio by giving discounts to enable quick payment because it will help in increasing their investment by reinvesting the funds collected from their customers and should utilize its assets efficiently in generating more income for the company.

Keywords: Liquidity, Leverage, Efficiency, Profitability, Aryton Drugs