It is for a dissertation where i owe a company named Jet Ranch where i rent a ha

Question

It is for a dissertation where i owe a company named Jet Ranch where i rent a hall for wedding and anniversary and any events. The hall costs rs 50000 per day and it can accomodate maximum 300 pax.

since 3 years our profitabilty are decreasing.

2014: 7 million

2015 : 5 million

2016 : 3.5 million.

Decrease in profitabilty is my independent variable and my dependent variable is competition, poor marketing and the price of the hall is to high.

i need a literature review on decrease in profitability.

Explanation / Answer

The dependent variable should be profitability as it is dependent on other external factors like competition, poor marketing and price of the hall.

As per various literature review, the factors effecting profitability can be many folds. For example Vijayakumar and Venkatachalan (2003) ina study in 2003 found that not managing working capital well can lead to a falling profitability in a competing industry. They found that keeping more current assets causes a reduction in profitabilit, whcih might be the case in the wedding hall case.

A structured way to look at the issue of falling profitability would to break down the problem:-

Profit = Revenue - Costs,

So the fall in profitability could be due to falling revenue( Which is a function of poor marketing and competition)

and Rising Costs( NOt managing the working capital well) or a combination of both.

Elizabeth Duncan and Elliott in a 2004 study showed that financial performance metrics like capital adequacy , interest margin and ROA, are positively co-rrelated with customer service satisfaction levels whcih might be a factor impacting the profitability in our case.

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