ABSTRACT

                               This paper uses several measures of profitability to examine the determinants of profitability for the Indian petroleum companies i.e. Bharat petroleum corporation limited (BPCL), Indian Oil Corporation limited (IOCL), Hindustan Petroleum Corporation Limited (HPCL), and Cairn India.  The purpose of this study is to observe the association among the Activity ratio or Turnover ratio and profitability of the Indian Petroleum companies over the preceding six years period from 2010 – 2015. These ratio analyze have enormous possibilities to help organizations in improving their revenue generation capability as well as reducing of expenses. I have used five ratio as a variables for the analyses i.e. Inventory Turnover Ratio (ITR); Debtors’ Turnover Ratio (DTR); Working Capital Turnover (WCT); Total Assets Turnover Ratio (TAT) and Profit Margin (PM). Profitability as a dependent variable is represented by profit margin (PM) while Activity ratio or Turnover ratio stands as ITR, DTR, WCT, and TAT for independent variables. Secondary data were obtained from the financial statements, and income statement of the certain petroleum companies’ financial statement. The data have been analyzed with descriptive research technique and multiple regressions to find out the link between the variables. There is a negative relationship between working capital turnover and the profitability of the petroleum companies. On the other hand, total asset turnover is positively associated with profitability of petroleum companies. Indian oil companies should also try and boost the asset turnover by using different persuasive strategies and make sure the equipment and wealth are helping you produce more revenue than to spend on maintenances.

Keywords: Profitability Determinants, Petroleum Industry, Financial Exploration, Inventory Turnover Ratio, Debtors’ Turnover Ratio