We intend to examine empirically how a firm’s profitability performance would impact its growth process and what implications follow for the validity of Gibrat’s law. The basic thesis that is tested in this study is that smaller firms, being more constrained in obtaining outside funds for growth, can possibly show a higher propensity to growth when their internally generated profits are high.
This study supports Gibrat’sLaw,showing that size and growth rate are independent.The most important factor to the firm which is known as the firm size. The firm size is not only the visual size of the firm but also measure the sustainability and the depth of the firm due to high or poor management of the firm.
The firm is liable for this because of the adaptability and the attractiveness of the firm.Size is primarily determined by the goals and objectives of the organization and influences the efficiency of operations. The factors are determined to flow the size of the firm.Size of the firm depends on the assets availability, capital management, inventories, nature of the industry, requirement of capital, market size etc.
so the understanding of the firm size is more important due to the comparison of the others. The more of the internal has the assets, the more of the firm gain from its capital. Lamberson, 1995).Resource availability of the firm increases the reputation and the strength of the firm. It increases the firm dignity and the profitability of the organization. It has the positive and negative correlation with the firm. The firm has more asset value; the firm is on the top.