Investing Inventory and its Moderating Role in the Relationship Between Production Capacity and Operating Profitability - Applied Research on A Number of Iraqi Industrial Companies

Abstract

The current research aims to study the relationship between production capacity and profitability after including the moderator role of investment in inventory, especially the main reason for investment in fixed assets as a measure of production capacity is to make profit. If the organization expands the industrial base by increasing production capacity to the limits It is not possible for any organization to continue without building its production capacity associated with investing fixed assets such as buildings, machinery, equipment, land, and cars. Profits can be generated by investment in these assets to ensure profitability in the long term and inventory investment is another determinant of the profitability of the organization in addition to the expected impact of production capacity and growth, especially that the efficient investment in the inventory reduces many of the costs associated with it and thus increase the profitability of the organization, which calls for studying the relationship between production capacity and profitability with the inclusion of the moderator role of the efficiency of investing inventory. The research has based on the secondary data published in the Investor Guide issued by the Iraqi Stock Exchange for a sample of (16) industrial companies selected by means of the intentional sampling method for the period (2006-2015). The variables were then measured and analyzed quantitatively and statistically according to a research horizon combining two methods of analysis; spatial variation (companies) and temporal variation (duration of research) . The study, after conducting the required analyzes of the sample data and testing the hypotheses of the research reached to a number of conclusions that were formulated after the intellectual reasoning of the results summarized in their content that the inventory plays a moderator role or modified the strength of the relationship between the production capacity and profitability of the studied Iraqi industrial companies.