The impact of inventories on the profitability of companies listed on the Portuguese stock exchange.
Abstract
This study investigates the impact of inventory levels on the profitability of Portuguese listed companies. To this end, annual panel data from 22 listed companies covering the period from 2017 to 2024 were analysed using a fixed-effects panel model estimated with Driscoll–Kraay standard errors. The results indicate that inventory levels have a positive and statistically significant effect on firms' profitability, measured by return on equity (ROE). The findings also show that firm size, EBITDA margin, changes in fixed tangible and intangible assets, and changes in capital expenditure (Capex) are positively associated with profitability, whereas debt does not exert a statistically significant effect. These results highlight the importance of efficient inventory management and sustained investment in productive assets as key drivers of firms' financial performance. This study contributes to the existing literature by providing empirical evidence on the determinants of profitability among Portuguese listed companies and by emphasizing the role of inventory management and investment decisions in enhancing firm value.
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Portuguese Journal of Finance, Management and Accounting
e-ISSN: 2183-3826
DOI: 10.54663/2183-3826
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