Impact of Operating and Financial Expenses on Sales Revenue: The Case of Fauji Fertilizer Company Limited

Waqar Khalid; Saifullah Khan

doi:doi:10.11648/j.ijber.20170603.12

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Impact of Operating and Financial Expenses on Sales Revenue: The Case of Fauji Fertilizer Company Limited

Waqar Khalid, Saifullah Khan

Published in International Journal of Business and Economics Research (Volume 6, Issue 3)

Received: 18 May 2017 Accepted: 31 May 2017 Published: 5 July 2017

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Abstract

This paper is the first attempt to study the impact of operating and financial expenses on sales revenue of the Fauji Fertilizer Company Limited in Pakistan and to seek the nature as well as the strength of the relationship between sales and these expenses. The time series data for fourteen years covering 2002-2015 used were analyzed by using the Ordinary Least Square technique and a multiple regression model. These were supplemented with the elasticity and causality tests. The major findings established that there is a substantial relationship between operating expenses and sales revenue of the company, however; the relationship between financial expenses and sales revenue is not so strong comparatively. The results also confirmed that there is a significant increase in the sales revenue of the company caused by a unit change in operating expenses. It was suggested that the company should make aware the customers through advertising and general publicity on the uses and benefits of their multi-products produced. The more increase in expenses on operational aspects over the financial expenses was recommended in the future for the company in this study.

Published in	International Journal of Business and Economics Research (Volume 6, Issue 3)
DOI	10.11648/j.ijber.20170603.12
Page(s)	40-47
Creative Commons	This is an Open Access article, distributed under the terms of the Creative Commons Attribution 4.0 International License (http://creativecommons.org/licenses/by/4.0/), which permits unrestricted use, distribution and reproduction in any medium or format, provided the original work is properly cited.
Copyright	Copyright © The Author(s), 2017. Published by Science Publishing Group

Keywords

Operating, Financial Expenses, Sales Revenue, FFC, Advertising, Multi-Products

References

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[2]	Akanbi, P. A., Adeyeye, T. C. (2011), “The Association between Advertising and Sales Volume: A Case Study of Nigerian Bottling Company Plc”, Journal of Emerging Trends in Economics and Management Sciences (JETEMS), 2 (2): 117-123.
[3]	Cunningham, B. M., Nikolai, L. A. & Bazley, J. D. (2002), “Accounting (Information for Business Decisions), 2^nd Edition, Columbia: Thomason Learning.
[4]	Ekelund, R. B. & William, P. G. (1969), “A Reconsideration of Advertising Expenditures, Aggregate Demand and Stabilization”, Quarterly Review of Economics and Business (summer), pp. 71-77.
[5]	Elliot, C. (2001), “A Cointegrating Analysis of Advertisement and Sales Data”, Review of Industrial Organization, Vol. 18, pp. 417-426.
[6]	FFC (2016), “Shaping a Sustainable Future”, Fauji Fertilizer Company Limited Annual Report 2016, the FFC, pp. 1-232.
[7]	Granger, C. W. J. (1969), “Investigating Casual Relations by Econometric Models and Cross-spectral Methods”, Econometrica, Vol. 37 (3), pp. 424-438.
[8]	Guo, Chiquan (2003), “Cointegrting Analysis of Advertising Consumption Relationship”, Journal of the Academy of Business and Economics, February, Obtained through the internet: www.findarticles.com, [Accessed on 3^rd February, 2008].
[9]	Kamber, T. (2002), “The Brand Manager Dilemma: Understanding How Advertising Expenditures Affect Sales growth during the recession”, The Journal of Brand Management, Vol. 10 (2), pp. 106-120.
[10]	Lee, J., Shin, B. S. & In Chung (1996), “Causality between Advertising and Sales: New Evidence from Cointegration”, Applied Economic Letters, Vol. 3, pp. 299-301.
[11]	Leong, S. M., Outiaris, S. & Franke, G. R. (1996), “Estimating Long term Effects of Advertising on Sales: A Cointegrating Perspective”, Journal of Marketing Communication, Vol. 2 (2), pp. 111-122.
[12]	Olaniyi, T. A., Salman, R. T. & Adebayo, S. A. (2013), “Impact of Advertising on Turnover of Brewery Companies in Nigeria”, International Journal of Science and Research (IJSR), 2 (6): 2319-7064.
[13]	Pagan, J., Sethi, S. &Soydemir, G. A. (2001), “The Impact of Promotion/Advertising Expenditures on Citrus Sales”, Applied Economic Letters, Vol. 8 (10), pp. 659-663.
[14]	Pandey, I. M. (2000), Financial Management, New Delhi, Vikas.
[15]	PSX (2014), “Top 25 Companies Awards 2014-2015”, Pakistan Stock Exchange Limited, the PSX, pp. 1-43.
[16]	Sundarsan, P. K. (2007), “Evaluating Effectiveness of Advertising on Sales: A Study using Firm Level Data”, ICFAI Journal of Managerial Economics, Vol. V (1), pp. 54-62.
[17]	Taylor, L. D. & Daniel, W. (1972), “Advertising and Aggregate Consumption Function”, American Economic Review, Vol. LX11 (4), pp. 642-655.
[18]	Verdon, W. A., Campell, R. McConnel. & Theodore, W. R. (1968), “Advertising Expenditures as an Economic Stabilizer: 1945-64”, Quarterly Review of Economics and Business (Spring), pp. 7-18.

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APA Style

Waqar Khalid, Saifullah Khan. (2017). Impact of Operating and Financial Expenses on Sales Revenue: The Case of Fauji Fertilizer Company Limited. International Journal of Business and Economics Research, 6(3), 40-47. https://doi.org/10.11648/j.ijber.20170603.12

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ACS Style

Waqar Khalid; Saifullah Khan. Impact of Operating and Financial Expenses on Sales Revenue: The Case of Fauji Fertilizer Company Limited. Int. J. Bus. Econ. Res. 2017, 6(3), 40-47. doi: 10.11648/j.ijber.20170603.12

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AMA Style

Waqar Khalid, Saifullah Khan. Impact of Operating and Financial Expenses on Sales Revenue: The Case of Fauji Fertilizer Company Limited. Int J Bus Econ Res. 2017;6(3):40-47. doi: 10.11648/j.ijber.20170603.12

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@article{10.11648/j.ijber.20170603.12,
  author = {Waqar Khalid and Saifullah Khan},
  title = {Impact of Operating and Financial Expenses on Sales Revenue: The Case of Fauji Fertilizer Company Limited},
  journal = {International Journal of Business and Economics Research},
  volume = {6},
  number = {3},
  pages = {40-47},
  doi = {10.11648/j.ijber.20170603.12},
  url = {https://doi.org/10.11648/j.ijber.20170603.12},
  eprint = {https://article.sciencepublishinggroup.com/pdf/10.11648.j.ijber.20170603.12},
  abstract = {This paper is the first attempt to study the impact of operating and financial expenses on sales revenue of the Fauji Fertilizer Company Limited in Pakistan and to seek the nature as well as the strength of the relationship between sales and these expenses. The time series data for fourteen years covering 2002-2015 used were analyzed by using the Ordinary Least Square technique and a multiple regression model. These were supplemented with the elasticity and causality tests. The major findings established that there is a substantial relationship between operating expenses and sales revenue of the company, however; the relationship between financial expenses and sales revenue is not so strong comparatively. The results also confirmed that there is a significant increase in the sales revenue of the company caused by a unit change in operating expenses. It was suggested that the company should make aware the customers through advertising and general publicity on the uses and benefits of their multi-products produced. The more increase in expenses on operational aspects over the financial expenses was recommended in the future for the company in this study.},
 year = {2017}
}

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TY  - JOUR
T1  - Impact of Operating and Financial Expenses on Sales Revenue: The Case of Fauji Fertilizer Company Limited
AU  - Waqar Khalid
AU  - Saifullah Khan
Y1  - 2017/07/05
PY  - 2017
N1  - https://doi.org/10.11648/j.ijber.20170603.12
DO  - 10.11648/j.ijber.20170603.12
T2  - International Journal of Business and Economics Research
JF  - International Journal of Business and Economics Research
JO  - International Journal of Business and Economics Research
SP  - 40
EP  - 47
PB  - Science Publishing Group
SN  - 2328-756X
UR  - https://doi.org/10.11648/j.ijber.20170603.12
AB  - This paper is the first attempt to study the impact of operating and financial expenses on sales revenue of the Fauji Fertilizer Company Limited in Pakistan and to seek the nature as well as the strength of the relationship between sales and these expenses. The time series data for fourteen years covering 2002-2015 used were analyzed by using the Ordinary Least Square technique and a multiple regression model. These were supplemented with the elasticity and causality tests. The major findings established that there is a substantial relationship between operating expenses and sales revenue of the company, however; the relationship between financial expenses and sales revenue is not so strong comparatively. The results also confirmed that there is a significant increase in the sales revenue of the company caused by a unit change in operating expenses. It was suggested that the company should make aware the customers through advertising and general publicity on the uses and benefits of their multi-products produced. The more increase in expenses on operational aspects over the financial expenses was recommended in the future for the company in this study.
VL  - 6
IS  - 3
ER  -

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Author Information

Waqar Khalid

School of Economics, Quaid-I-Azam University, Islamabad, Pakistan
Saifullah Khan

Department of Management Sciences, University of Swabi, Khyber Pakhtun Khwa, Pakistan

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APA Style

Waqar Khalid, Saifullah Khan. (2017). Impact of Operating and Financial Expenses on Sales Revenue: The Case of Fauji Fertilizer Company Limited. International Journal of Business and Economics Research, 6(3), 40-47. https://doi.org/10.11648/j.ijber.20170603.12

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ACS Style

Waqar Khalid; Saifullah Khan. Impact of Operating and Financial Expenses on Sales Revenue: The Case of Fauji Fertilizer Company Limited. Int. J. Bus. Econ. Res. 2017, 6(3), 40-47. doi: 10.11648/j.ijber.20170603.12

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AMA Style

Waqar Khalid, Saifullah Khan. Impact of Operating and Financial Expenses on Sales Revenue: The Case of Fauji Fertilizer Company Limited. Int J Bus Econ Res. 2017;6(3):40-47. doi: 10.11648/j.ijber.20170603.12

Copy | Download

@article{10.11648/j.ijber.20170603.12,
  author = {Waqar Khalid and Saifullah Khan},
  title = {Impact of Operating and Financial Expenses on Sales Revenue: The Case of Fauji Fertilizer Company Limited},
  journal = {International Journal of Business and Economics Research},
  volume = {6},
  number = {3},
  pages = {40-47},
  doi = {10.11648/j.ijber.20170603.12},
  url = {https://doi.org/10.11648/j.ijber.20170603.12},
  eprint = {https://article.sciencepublishinggroup.com/pdf/10.11648.j.ijber.20170603.12},
  abstract = {This paper is the first attempt to study the impact of operating and financial expenses on sales revenue of the Fauji Fertilizer Company Limited in Pakistan and to seek the nature as well as the strength of the relationship between sales and these expenses. The time series data for fourteen years covering 2002-2015 used were analyzed by using the Ordinary Least Square technique and a multiple regression model. These were supplemented with the elasticity and causality tests. The major findings established that there is a substantial relationship between operating expenses and sales revenue of the company, however; the relationship between financial expenses and sales revenue is not so strong comparatively. The results also confirmed that there is a significant increase in the sales revenue of the company caused by a unit change in operating expenses. It was suggested that the company should make aware the customers through advertising and general publicity on the uses and benefits of their multi-products produced. The more increase in expenses on operational aspects over the financial expenses was recommended in the future for the company in this study.},
 year = {2017}
}

Copy | Download

TY  - JOUR
T1  - Impact of Operating and Financial Expenses on Sales Revenue: The Case of Fauji Fertilizer Company Limited
AU  - Waqar Khalid
AU  - Saifullah Khan
Y1  - 2017/07/05
PY  - 2017
N1  - https://doi.org/10.11648/j.ijber.20170603.12
DO  - 10.11648/j.ijber.20170603.12
T2  - International Journal of Business and Economics Research
JF  - International Journal of Business and Economics Research
JO  - International Journal of Business and Economics Research
SP  - 40
EP  - 47
PB  - Science Publishing Group
SN  - 2328-756X
UR  - https://doi.org/10.11648/j.ijber.20170603.12
AB  - This paper is the first attempt to study the impact of operating and financial expenses on sales revenue of the Fauji Fertilizer Company Limited in Pakistan and to seek the nature as well as the strength of the relationship between sales and these expenses. The time series data for fourteen years covering 2002-2015 used were analyzed by using the Ordinary Least Square technique and a multiple regression model. These were supplemented with the elasticity and causality tests. The major findings established that there is a substantial relationship between operating expenses and sales revenue of the company, however; the relationship between financial expenses and sales revenue is not so strong comparatively. The results also confirmed that there is a significant increase in the sales revenue of the company caused by a unit change in operating expenses. It was suggested that the company should make aware the customers through advertising and general publicity on the uses and benefits of their multi-products produced. The more increase in expenses on operational aspects over the financial expenses was recommended in the future for the company in this study.
VL  - 6
IS  - 3
ER  -

Copy | Download