The impact of inventory management on the profits of retail enterprises listed on the Vietnamese stock markets

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Abstract

This study evaluated the impact of inventory management on the profitability of retail enterprises listed on the Vietnamese stock market. Grounded in the lean theory and the theory of constraints (TOC), and drawing on the research of Gołaś (2020) and Alnaim and Kouaib (2023), the study utilized financial data from these companies over a 10-year period, from 2014 to 2023, to analyze indicators related to inventory and profitability. The study results show that the high number of inventory days and the high inventory ratio to revenue make business profits low. In addition, the study also shows that retail businesses with high financial leverage and large scale will have higher profits than other businesses in the same industry. These findings provide vital information, empowering retail businesses to better understand the impact of inventory management on business profits and offer practical recommendations to improve inventory management efficiency and optimize profits. These practical recommendations are not just theoretical but are designed to be easily implementable, enabling businesses to make changes that can positively impact their bottom line and make the audience feel empowered and capable of implementing changes.

Keywords: Inventory Management, Inventory to Revenue Ratio, Profit, Storage Days, Vietnam

Authors’ individual contribution: Conceptualization — H.T.T.T.; Methodology — O.T.T.L.; Writing — H.T.T.T. and O.T.T.L.; Investigation — H.T.T.T.; Resources — H.T.T.T.; Supervision — O.T.T.L.

Declaration of conflicting interests: The Authors declare that there is no conflict of interest.

JEL Classification: M40, M41

Received: 04.09.2024
Revised: 17.12.2024; 01.05.2025
Accepted: 06.06.2025
Published online: 11.06.2025

How to cite this paper: Ta, H. T. T., & Le, O. T. T. (2025). The impact of inventory management on the profits of retail enterprises listed on the Vietnamese stock markets [Special issue]. Journal of Governance & Regulation, 14(2), 353–362. https://doi.org/10.22495/jgrv14i2siart14