scholarly journals Working capital management and business performance: evidence from Latin American companies

Author(s):  
Juan Gallegos Mardones
Innovar ◽  
2014 ◽  
Vol 24 (51) ◽  
pp. 5-17 ◽  
Author(s):  
Samuel Mongrut ◽  
Darcy Fuenzalida O’Shee ◽  
Claudio Cubillas Zavaleta ◽  
Johan Cubillas Zavaleta

The aim of this study is to determine the factors that affect working capital management in Latin American companies. Using an unbalanced panel data analysis for companies quoted in five Latin American capital markets it is shown that companies in Argentina, Brazil, Chile and Mexico are holding cash excesses, which could destroy firm value. Results show that the industry cash conversion cycle, the company market power, its future sales and country risk have an influence on the way Latin American companies manage their working capital with significant differences among countries in the region.


2019 ◽  
Vol 14 (2) ◽  
pp. 216-226
Author(s):  
Ita Nuryana ◽  
Margunani Margunani

The classic factor determining the performance of a micro business from the financial side is the working capital management but some of these efforts often fail because of entrepreneurial commitment issues. The existence of such phenomena has pushed further to reveal the role of entrepreneurial commitment in increasing the role of working capital management on business performance. This study aimed to determine the effect of working capital management on student start-up performance that is moderated by entrepreneurial commitment. This research was a quantitative research. The sample in this study was 169 student start-up businesses throughout the Province of Central Java. Analysis of the data in this study used moderate regression analysis (MRA). Through the Moderating Regression Analysis (MRA) the results of this study indicated that entrepreneurial commitment moderated the effect of working capital management on the sustainability of start-up, while working capital had no effect on business performance. The implication of this research was the development of risk and return theory by making entrepreneurial commitment as a reinforcement of the effect of working capital management on business performance.


2020 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Ali İhsan Akgün ◽  
Ayyüce Memiş Karataş

PurposeThis study examines the relationship between working capital management and business performance.Design/methodology/approachThe relationship between the working capital management and business performance is examined using panel data analysis for a sample of EU-28 listed firms for the period from 2003 to 2012. To examine this relationship, an ordinary least squares (OLS) regression model is used to analyze the data obtained from the sample. The dependent variable consists of three measurements, namely return on asset (ROA), return on equity (ROE) and earnings before interest and taxes margin (EBITM), which are used as proxies for accounting-based measures of performance.FindingsThe authors examined the aforementioned relationship during the 2008 financial crisis. The OLS regression analysis suggests that there is a negative relationship between gross working capital and business performance for code law countries. The results also show that liquidity measures estimated by current ratio have a statistically significant impact on business performance indicated by ROA for all EU countries. The 2008 financial crisis had a significantly negative impact on ROA. Additionally, the findings regarding financial inclusion show a negative relationship between gross working capital and business performance among EU and other performer countries.Practical implicationsOverall, the empirical findings are consistent with Afrifa's (2016), who suggests that cash flow should increase investment in working capital to improve performance indicated by EBITM for old EU members.Originality/valueWhile many empirical studies investigate the relationship between working capital and firm profitability, most do not consider the impact of the 2008 financial crisis apart from Tsurate (2019). The authors examine whether legal origins are important determinants of working capital management policies and business performance. Thus, empirically, the code law countries have a negative relationship between gross working capital, business performance and EBITM.


Liquidity ◽  
2017 ◽  
Vol 6 (2) ◽  
pp. 95-102
Author(s):  
Sri Setia Ningsih

The purpose of this research is to know about working capital management applied, and its influence on profitability and risk. The research object is trading company moves in import & distribute chemical raw material. The research used analysis descriptive method, and the hypothesis was testing by simple linier regression, correlation, and determination. The result of the research shows that the effect of the implementation of working capital management on the change of the net working capital with tend to rise has a profitability level of 10.4% lower than the net working capital change with tend to go down of 46%, but instead on the risk level, the net working capital change with tend to rise has a risk level of 43.8% higher than the change in net working capital with tend to go down of 0.3%.Based on  t test, the result shows that the net working capital change influence  is not significant  to profitability and risk.


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