Relationship between Efficiency and Profitability of Hotel Businesses Listed in the Stock Exchange of Thailand

Abstract

This study aims to investigate the relationship between efficiency and profitability of 10 hotel businesses listed in the Stock of Exchange of Thailand during 2001–2024. Efficiency of hotel business is measured by 3 financial ratios, including fixed assets turnover ratio, inventory turnover ratio and sales and administrative expense to total revenue ratio, while profitability is measured by 2 financial ratios, including net profit margin and return on assets. The findings reveal that sales and administrative expense to total revenue ratio has the negative effect on both net profit margin and return on assets. That is, one percent increase in sales and administrative expense to total revenue ratio will cause net profit margin and return on assets to decrease by 1.0566 และ 0.1040 percent, respectively. In addition, this study finds that it has the adverse impact on net profit margin but no impact on return on assets as one time increase in fixed assets turnover ratio will lead to 15.7514 decrease in net profit margin. Nevertheless, the findings reveal that inventory turnover ratio does not have any relationship with either net profit margin or return on assets.