Factors influencing financial performance in South Africa’s food and beverage industry: An empirical analysis

Abstract

Purpose: This study aims to investigate the determinants of financial performance in the food and beverage sector of South Africa, focusing on 11 listed companies on the Johannesburg Stock Exchange. Methodology: The study employs panel data regression analysis using secondary data sourced from the Integrated Real-time Equity System (IRESS) Library, covering the period from 1988 to 2017. Return on assets (ROA) is used as the performance indicator, while the explanatory variables include debt ratio, cash conversion cycle, leverage, labour, and capital. Results: The study’s findings reveal that labour and capital are statistically significant determinants of financial performance in the food and beverage sector of South Africa. On the other hand, debt ratio, cash conversion cycle, and leverage have an insignificant impact on the firms' performance. Theoretical contribution: This study contributes to the literature on the determinants of financial performance in the food and beverage sector, particularly in the context of South Africa. The findings highlight the importance of labour and capital as key factors influencing financial performance in the sector. Practical implications: The study's results have practical implications for managers and stakeholders in the food and beverage sector of South Africa. It is recommended that firms in the sector pay more attention to labour and capital as these variables have proven to be strong determinants of financial performance.

Keywords

• financial performance
• financial statements
• Johannesburg Stock Exchange
• secondary data
• explanatory variables
• autoregressive distributed lag