REVENUE AND EXPENDITURE STRUCTURE, CAPITAL EXPENDITURE, AND PROFITABILITY: EVIDENCE FROM CHINA’S LISTED BEVERAGE COMPANIES

Abstract

Based on panel data from Chinese A-share listed beverage companies from 2014 to 2023, this paper uses ordinary least squares (OLS) to conduct a baseline regression. Using return on assets (ROA) as the explained variable, this paper systematically examines the direct impact of financial indicators such as sales revenue, accounts receivable, investment income, operating costs, accounts payable, period expense ratio, and R&D investment on firm profitability. Furthermore, capital expenditure (CE) is introduced as a mediating variable. Through stepwise regression and mediation effect tests, this paper further reveals the indirect mechanism by which revenue and expenditure structure influence profitability through investment decisions. The empirical results show that sales revenue, investment income, and period expense ratio have a significant positive impact on firm profitability, while operating costs and R&D investment have a significant negative impact on profitability. Accounts receivable and accounts payable have no significant impact on profitability. Further mediation effect analysis reveals that capital expenditure has a significant transmission effect between some financial indicators and profitability, indicating that firms’ capital investment decisions play an important mediating role in the relationship between revenue, costs, and profitability. Overall, this study reveals the main financial drivers of profitability in the beverage industry and their impact paths, providing an empirical basis for understanding the profit model of industry enterprises.