GROWTH AND PROFITABILITY OF POLISH AGRICULTURAL DISTRIBUTORS

Abstract

The relationships between growth of sales and profitability of companies have been little studied and reported results for different countries, industries and over the time are often contradictory. Here the relationships between growth of sales measured as the annual percentage variation in sales and profitability measured with return on sales, return on assets and return on equity for 24 Polish agricultural distributors, which account for over 90% of the market in sales terms, is studied in 11-years period between 2006 and 2016. This period includes faster and slower economic growth, but no recession. The Spearman rho and Kendall tau-B coefficients have been used to quantify these relationships and examine their statistical significance. The existence of positive and statistically significant relationships between various profitability measures and the growth of sales have been found. The highest correlation has been identified between the growth of sales and return on equity, weaker for return on assets and the weakest for return on sales. It is shown that relationships between the growth of sales and prior years profitability measures are weaker than those identified for the same year. Agricultural distributors in order to grow in a sustainable way should pay an attention to their profitability levels, which should be linked to the growth of sales.