ASSESSING PROFITABILITY OF FORTUNE 500 FIRMS USING MOVING AVERAGES AND LINEAR MODELS (LINEAR IN THE PARAMETERS)

• Activity Number: 176
• Type: Contributed
• Date/Time: Monday, August 10, 2015 : 10:30 AM to 12:20 PM
• Sponsor: Business and Economic Statistics Section
• Author(s): Leo Upchurch* and Fan Wu
• Companies: and Tuskegee University
• Keywords: ANP (ABOVE-NORMAL PROFITS) ; LFS (Large firm size) ; MP (MONOPOLY PROFITS) ; P (PROFITS) ; S (SALES) ; MT (MONOPOLY THEORY)

Abstract

Based on data forFORTUNE 500 firms for the years 1955 through 2012 moving averages are used to examine profitability. Firms are broadly categorized as 'VENERABLE OLD FIRMS' and 'OTHERS'. Within each of these two broad categories, there are myriad ways of further sub-categorizing, e.g., financial services & insurance, transportation, high technology, agriculture &manufacturing, foods, beverages& chemicals, health & medical,and miscellaneous.Sub-categorizing is difficult because firms are able to diversify by leveraging their comparative advantages to move profitably into areas (products) that were not in their purview when the firm was first established. Profitability, for our purposes is viewed as normal (NP), above normal (ANP), and monopoly (MP).