Causal Effect of Advertisement on Profit and Sales

The present study evaluates the relationship between advertisement expenditure, sales revenue and the profits of companies, which are listed in the National Stock Exchange (NSE).In the past researchers evaluated the impact of sales on advertisement or sales. The present research will study the impact of the advertisement expenditure, sales revenue and the profits on each other. There is a need of this study. The tools used for the analysis are descriptive statistics, unit root test, granger causality, VAR (Vector Auto Regression) and Variance Decomposition. The findings of the research shows that there is a visible impact of the previous years sales on the sale of current year as well as the sale impact the advertisement and profit as well. On the other hand the profit impacts the advertisement