DETERMINANTS OF PROFITABILITY IN THE BORSA ISTANBUL CEMENT SECTOR: A PERSPECTIVE ON CASH FLOW AND ACTIVITY EFFICIENCY
DOI:
https://doi.org/10.64734/bjss.1-1-04Keywords:
profitability, cash flow, efficiencyAbstract
This study examines the determinants of profitability in the capital-intensive Istanbul Stock Exchange (BIST) Cement sector from the perspectives of operational efficiency, growth dynamics, and cash flow indicators. The main objective of the study is to go beyond traditional profitability analyses and reveal the impact of operational efficiency and cash generation capacity on the “quality of profitability.” In this context, data from 11 cement companies traded on the Istanbul Stock Exchange for the period 2014-2023 were tested using dynamic panel data analysis methods. The study uses Return on Assets (ROA) as the dependent variable, while the independent variables are categorized as operational efficiency (Asset Turnover Ratio, Inventory Turnover Ratio, Debt Turnover Ratio), growth (Asset and Sales Growth), and cash flows (Operating, Investing, Financing).
The analysis findings show that the strongest determinant of profitability in the cement industry is “operating efficiency,” not “growth.” The positive and strong effect of Asset Turnover and Inventory Turnover on profitability proves the importance of efficient use of assets. In contrast, the negative effect of Debt Turnover indicates that paying off debts too quickly weakens liquidity and reduces profitability. The most striking finding of the study is that Cash Flow from Operating Activities (CFOA) has a negative impact on profitability, contrary to expectations. This is explained by the pressure on operational cash flow caused by high energy costs and long collection periods in the sector. Furthermore, no statistically significant effect of asset and sales growth rates on profitability was found. In conclusion, the study reveals that sustainable financial performance in the cement sector can be achieved through operational efficiency, strategic inventory management, and balanced cash flow management rather than volume growth.
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Copyright (c) 2025 Başak ERDEM ÇANKAYA- Mehmet ÜRKMEZ (Author)
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