Foreign literature

Profitability
According to Horton, M. (2021), Profitability is a measurement of efficiency. It can tell
key stakeholders whether a company is able to sustain its position in the market and continue to
grow. It is the extent to which a company earns a profit. It refers to how much money a business
makes. To determine profitability, it can be shaped by the company and its management team
while others may not necessarily be easy to control. Profitability is a financial metric that
companies use to determine how successful they are. This is a relative measurement and is
normally expressed as a ratio.
Inventory Management
According to Hayes, A. (2023), Inventory management is the entire process of managing
inventories from raw materials to finished products. Inventory management tries to efficiently
streamline inventories to avoid both gluts and shortages. A company's inventory is one of its
most valuable assets. In retail, manufacturing, food services, and other inventory-intensive
sectors, a company's inputs and finished products are the core of its business. A shortage of
inventory when and where it's needed can be extremely detrimental. Inventory management is
important for businesses of any size. Knowing when to restock inventory, what amounts to
purchase or produce, what price to pay—as well as when to sell and at what price—can easily
become complex decisions.
Net Profit Margin
According to Murphy, C. (2022), Net Profit Margin is typically expressed as a percentage
but can also be represented in decimal form. The net profit margin illustrates how much of each
dollar in revenue collected by a company translates into profit. It helps investors assess if a
company's management is generating enough profit from its sales and whether operating costs
and overhead costs are under control. Net profit margin is one of the most important indicators of
a company's overall financial health. Net profit margin can be influenced by one-off items such
as the sale of an asset, which would temporarily boost profits. Net profit margin doesn't home in
on sales growth, nor does it provide insight as to whether management is managing
its production costs. It considers all costs involved in a sale, making it the most comprehensive
and conservative measure of profitability.
Return on Assets
According to Hargrave, M. (2022), Return on Assets is a metric that indicates a
company's profitability in relation to its total assets. It can be used by management, analysts, and
investors to determine whether a company uses its assets efficiently to generate a profit. Return
on assets is the simplest of such corporate bang-for-the-buck measures. It tells you what earnings
are generated from invested capital or assets. A ROA that rises over time indicates the company
is doing well at increasing its profits with each investment dollar it spends. A falling ROA
indicates the company might have over-invested in assets that have failed to produce revenue
growth, a sign the company may be in some trouble.
Inventory Management Practices and Performance of consumer goods manufacturing
firms in Nairobi Kenya
EOQ (Economic Order Quantity) Model has impact on operational performance of
consumer goods manufacturing firms in Kenya relative to other inventory management practices
studied. It concluded that inventory management practices impact significantly the operational
performances of consumer goods manufacturing firms in Kenya. The implementation of
effective inventory management practices leads to many benefits in a firm, including ensuring
optimal production, meeting the assembly targets and on-time delivery, which are all associated
with operational efficiency. While there are different inventory management practices, the
findings of this research study establish that consumer goods manufacturing companies are more
likely to benefit from Economic Order Quantity model, Vendor Managed Inventory and Bar-
coding. This research study recommends that consumer goods manufacturing firms should
embrace effective inventory management practices. This is because an effective management of
inventories has an overall impact on enhancing operational performance of a firm, including a
guarantee of on-time delivery, ensuring optimal production levels are met, and making sure that
assembly targets are met, which, consequently, leads to a reduction of the reorder and holding
costs.

References:
https://www.investopedia.com/ask/answers/012715/what-difference-between-profitability-and-
profit.asp
https://www.investopedia.com/terms/i/inventory-management.asp#:~:text=Inventory
%20management%20refers%20to%20the,and%20processing%20of%20such%20items.
https://www.investopedia.com/terms/n/net_margin.asp
https://www.investopedia.com/terms/r/returnonassets.asp