Advertising expenditure and financial profitability of listed food and beverage companies in the Philippines

Abstract

Most companies use advertising to inform and persuade members of a particular target market or audience about their products, services, organizations, or ideas. In so doing, management expects an increase in the financial condition of the business. This study intends to investigate the significant relationship of advertising expenditure to return on sales and return on assets of food and beverage companies in the Philippines. Advertising expenditures, return on assets and return on sales of food and beverage companies listed in the Philippine Stock Exchange from 2013 to 2017. These are secondary data collected from the annual report and accounts of the firms under study. This study found out that return on assets is significantly correlated to advertising expenditure while return on sales is insignificantly correlated with advertising expenditure. This study concluded that advertising is one of the essential media of communication influencing the companies' performance in more than one way.