PROFITABILITY OF THE FOOD INDUSTRY IN POLAND – AN ORDERED LOGIT MODEL APPROACH

The article addresses the problem of financial determinants of return on equity (ROE) in the food industry in Poland. The analysis was conducted on the basis of the decomposition of the rate of return on sales and in conjunction with the system of indicators linking the return on sales to return on assets and equity. In addition, in order to identify the significance of individual components of the ROE system, ordered logit regression models were estimated. The proposed in the paper system of decomposition of the return on equity has allowed a multidimensional analysis of profitability determinants. Its implementation in the food industry sectors, using the logit regression models of ordered categories, has proven that the reasons for different ROE in the food industry sectors should be primarily sought in the ability to create value added, labour costs, rational management of financial expenses, efficient use of assets as well as in more aggressive shaping the capital structure, determining the level of financial leverage. In conclusion, the applied in the paper ordered logit model of the return on equity has proven to be a very good tool to assess the significance of the factors affecting the level of ROE rates in the food industry sectors. In addition, the proposed model apart from its applicability also possesses a practical value. It allows predicting probable scenarios of transition from a very low level of the return on equity to more favourable financial results measured with this profitability category.