FACTORS AFFECTING THE PROFITABILITY OF ENTERPRISES IN THE PROCESSING INDUSTRY IN CROATIA

The degree of profitability of an enterprise depends on its ultimate goal, but also on a number of factors from macro to mezzo to micro level. Despite the fact that the government through its investment incentive policy and the policy of lower tax rates can improve the profitability of each sector, the microeconomic determinants and their impact must be assessed for a long-term sustainable economic growth. The progress of national economy depends on better local resources, on the development of production based on their application, and on the creation of a sofisticated local demand that will allow local producers to anticipate and respond to the global needs by allowing them to develop advanced competitive dimensions and form a cluster of related and supportive production and enetrprises. Therefore, it is important for an enterprise to make profit in the t period to make investment in the product, production, and advertising in the t+1 period possible. The paper analyses the processing industry in the Republic of Croatia and evaluates the key factors for positive business results in that sector in the period before and after the economic crisis, which is the basis for a long-term economic growth and development of both the sector and the overall national economy.