An investigation on relationship between profitability, size and firm growth

In this paper, profitability, growth, size, and leverage data of 147 manufacturing firms which are operating in Istanbul Stock Exchange (BIST) in the period of 2008-2013 used as variables. The relationship between these variables analyzed quarterly with panel data analyze which considers both time and cross-section dimension. It was founded a positive relationship between profitability and firm growth while there was a negative relationship between firm growth and leverage. Also there was no statistical relationship between research & development spending and firm growth. Findings of this study includes managerial implications for the manufacturing firms in Turkey. The results indicated that profitable firms could grow. Profitable firms, small firms, firms reach an optimal level of working capital and optimal capital structure, can be said to have grown faster than other companies. Outcomes of study shows that profitable firms have higher opportunities for growth. If you want to grow your company, as a manager, profitability should increase, should reach economies of scale, an optimal capital structure level and reach the optimal level of working capital level due to these firms grow faster than other companies. Key Words: Profitability, Leverage, Size, R&D, Firm Growth