Financial Indicators as Predictors of Profitability, Market Value, and Corporate Sustainability: Evidence from Reliance Industries Limited

Abstract

This study aims at analysis of financial indicators, which have a predictive role in determining the profitability, market value, and corporate sustainability of Reliance Industries Limited (RIL). The study is based on quantitative research design, which uses secondary data from the company's published annual reports, published financial statements and sustainability reports and stock market disclosures for the selected study period. The variables used are financial indicators (liquidity ratio, leverage ratio, efficiency ratio and solvency ratio) and profitability, market value and corporate sustainability are the dependent variables. Relations among the variables are assessed by descriptive statistics and by performing multiple linear regression analysis. The results show that liquidity ratio, efficiency ratio, solvency ratio positively influence profitability, market value and corporate sustainability significantly while leverage ratio negatively influences the same significantly. The results of the regression models show that the financial indicators are reliable predictors of corporate performance and sustainability with a high explanatory power of the models. The study concludes that good financial management contributes to the profit of the organization, to the valuation of the market and to the sustainable business practices. The results offer important implications for companies' managers, investors, financial analysts and policy makers in the development of strategies for financially stable management and the sustainable creation of value.