As indicated earlier, capital intensity and JIT
system tend to have diverse impacts on inventory
adjustments and profitability differentials. The
results of multiple regression analysis to test the
relative impacts of capital intensity and the degree
to which companies embraced JIT philosophy
on profitability differentials over the nine years
studied are shown in Table 11. When net income
differential and net income differential as a
percentage of sales were used as the dependent
variable, the model will be referred to as Model
1 and Model 2, respectively