Motilal Oswal: In Pursuit Of Profitability - Connecting Corporate Profits With The Macro Economy
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Motilal Oswal Report
Since an economy’s prosperity is directly linked with productivity growth and the Corporate sector is, by far, the most productive in any country, corporate profitability is among the most widely and closely tracked indicators. Its importance for the equity markets is also unambiguous.
In this note, we present our methodology to estimate the comparable corporate profitability (measured as profit after taxes or PAT) for different economies using a macroeconomic identity, which we call the ‘Theory of Everything.’
Through this identity, we also discuss the key drivers of corporate profitability from the macroeconomic perspective.
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