A Study on Profitability of Afghanistan Coal Mine with ARDL Approach; Case Study of the North Coal Enterprise in Afghanistan

Document Type : Research Paper

Authors

1 Faculty of Economics, Baghlan University, Baghlan, Afghanistan

2 Faculty of Economics, Emory University, Atlanta, Georgia

3 Faculty of Mining and Geological Engineering, Kabul University, Kabul, Afghanistan

10.22059/ier.2024.360371.1007743

Abstract

This study aims to investigate and predict the profitability of the North Coal Enterprise [NCE] in Afghanistan. NCE is the only state-owned-profit company that holds the authority of coal mining in Afghanistan. Although, for some reason, many of the collieries are handed over to the private sectors, even so, four mines are remained within the authority domain of this company. For the recent years, the professionalism and effective management of this enterprise resulted to a better coal mining in the country. Given that, profitability is one of the most important and effective factors of valuation which could be the margin image of the policies and the result of decisions in a company. To estimate the profitability of this company, the ARDL model has been run in Eviews to see the short-term and long-term relationships. The information used includes profitability variables (net profit ratio to total capital), capital structure (debt to total capital ratio), current ratio or liquidity, which is considered as an example for the years 1989-2019. The mentioned data was collected from the Ministry of Industries and Mines and the Northern Coal office. The estimation results show that sales revenue in the long term and the current ratio as operating liquidity in the short term can influence the increase in profitability and there is a negative relationship between capital structure and profitability. 

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Iranian Economic Review

Articles in Press, Accepted Manuscript
Available Online from 12 February 2024

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