ABSTRACT
In a market economy, one of main goals for every company is to maximize the wealth of the shareholders, which is a result of maximizing the market value of the company. There are various profitability measures for company, butfrom ownership perspective most used measure of profitability is Return on equity (ROE) ratio. This ratio relates to the earnings left over for equity investors after debt service costs for company has been deducted from total capital invested in the asset. Numerous studies have been conducted with numerous factors examined to determine factors that have impact on business performance. In this paper, the authors intention was to explore studies so far done on profitability of companies and to find an area that hadn't been yet examined, and to give substantiation ofprofitability determinants grounded on dynamic panel data. For this purpose, this paper explored variables that have impact on profitability of companies whose shares were most traded on Zagreb stock exchange (one of criteria for share to be included in market index). Variables included in research are: Net Financial Debt (NFD)/ EBITDA ratio, yearly revenue percent change, Enterprise Value (EV)/ EBITDA ratio, dividend yield, operating margin ratio, debt to equity ratio and current liquidity ratio. Analysis was done on data of companies included in the official stock index of the Zagreb stock exchange, Crobex from 2010 to 2019 (before Covid-19 pandemic). The data was taken from the Thomson Reuters database where all data for selected companies necessary for this paper were collected.