scholarly journals Working Capital Management Policies and Returns of Listed Manufacturing Firms in Ghana

2017 ◽  
Vol 64 (2) ◽  
pp. 255-269 ◽  
Author(s):  
Anokye M. Adam ◽  
Edward Quansah ◽  
Seyram Kawor
Keyword(s):  
Stock Exchange ◽  
Manufacturing Firms ◽  
Capital Management ◽  
Working Capital ◽  
Working Capital Management ◽  
Financing Policies ◽  
Current Asset ◽  
Investment And Financing ◽  
Management Policies ◽  
Ghana Stock Exchange

Abstract This study sought to determine the effects aggressive/conservative current asset investment and financing policies have on firms′ return for six manufacturing firms listed at Ghana Stock Exchange for a period of 2000-2013. Data were obtained from the annual reports of the firms and the Ghana Stock Exchange. The study adopted longitudinal explanatory non-experimental research design applied to dynamic panel ARDL framework in analyzing the data. The results revealed that the current asset investment and financing policies have highly significant positive effects on returns to equity holders in the long-run. The empirical evidence suggests that conservative current asset investment policies increase firms return while conservative financing policies yields negative returns. The study therefore would enable finance managers to be able to fashion out the appropriate working capital management policies. A firm pursuing conservative current asset investment policy should balance it with aggressive current asset financing policy in order to enhance profitability and create value for their investors.

scholarly journals Effects of working capital management policies on shareholders’ value: Evidence from listed manufacturing firms in Ghana

2019 ◽  
Vol 66 (5) ◽  
pp. 659-686
Author(s):  
Anokye Adam ◽  
Edward Quansah
Keyword(s):  
Stock Exchange ◽  
Manufacturing Firms ◽  
Capital Management ◽  
Working Capital ◽  
Working Capital Management ◽  
Investment Policies ◽  
Financing Policies ◽  
Current Asset ◽  
Management Policies ◽  
Ghana Stock Exchange

This study has sought to determine the effects of working capital management policies on shareholder value creation for six manufacturing firms listed at the Ghana Stock Exchange for the period of 2000-2013. Data were gathered from the annual reports of the firms and the publication of Ghana Stock Exchange. The study employed a longitudinal explanatory non-experimental research design applied to a dynamic panel Autoregressive Distributed Lags methodology framework for analysing the data. The results indicated that conservative current asset investment policies increase economic value added (EVA), whereas aggressive current asset investment policies enhance market-to-book ratio and Tobin?s Q in the long-run. On the other hand, conservative current asset financing policies enhance market-to-book ratio, Tobin?s Q, and EVA in the longrun. Thus, investors discount aggressive current assets? financing policies. A firm pursuing an aggressive current asset investment policy should balance it with a conservative current asset financing policy to create value for its shareholders.

Does Working Capital Management Affect the Profitability? A Case of Pakistani Manufacturing Firms

2013 ◽  
Vol 8 (4) ◽  
pp. 327-344
Author(s):  
Nisar Ahmad ◽  
Parvez Azim ◽  
Jamshaid ur Rehman
Keyword(s):  
Stock Exchange ◽  
Random Effect ◽  
Manufacturing Firms ◽  
Capital Management ◽  
Working Capital ◽  
Working Capital Management ◽  
Conservative Strategy ◽  
Management Policies ◽  
Random Effect Models ◽  
Positive Effect

This study investigates the effect of working capital management on profitability of 148 diverse manufacturing firms listed on Karachi Stock Exchange, Pakistan for the period January 2006 to December 2011. The fixed effect and random effect models results revealed that firms’ aggressive strategy of financing negatively affect the profitability. Moreover, tight credit policy, efficiency of stock-in-trade management, early payment policy and conservative strategy of investment in current assets are found to have significant positive effect on profitability of firms. Findings of the study suggested that profitability of firms can be improved by devising optimal working capital management policies and also emphasized the investigation of factors that must be considered by management while formulating appropriate working capital management policies.

scholarly journals Does Working Capital Management Affect Profitability of Ghanaian Manufacturing Firms?

2020 ◽  
Vol 23 (1) ◽  
pp. 1-18
Author(s):  
Kwadwo Boateng Prempeh ◽  
Godfred Peprah-Amankona
Keyword(s):  
Developing Economies ◽  
Stock Exchange ◽  
Optimal Level ◽  
Manufacturing Firms ◽  
Management Policy ◽  
Capital Management ◽  
Working Capital ◽  
Working Capital Management ◽  
Dynamic Panel Regression ◽  
Ghana Stock Exchange

AbstractThis paper analyses the link between working capital management and profitability of firms in the context of developing economies. A balanced panel consisting of eleven (11) manufacturing firms listed on the Ghana Stock Exchange covering the period of 2011-2017 was used. The link between working capital management and profitability was examined using dynamic panel regression (Arellano-Bond Estimation) technique. The study revealed that there is a significant positive linear relationship between working capital management and firms’ profitability. The findings also reveal the existence of a concave quadratic relationship between working capital management and firms’ profitability. There is an optimal level at which working capital management maximises firm’s profitability, therefore, managers need to ensure that they operate within the limits of the optimal level by implementing an effective and efficient working capital management policy. The study concludes that, the practice of an aggressive working capital management policy maximises a firm’s profitability.

scholarly journals WORKING CAPITAL MANAGEMENT EFFECT ON RETURN ON EQUITY- EVIDENCE FROM LISTED MANUFACTURING FIRMS ON GHANA STOCK EXCHANGE (GSE)

2020 ◽  
Vol 5 (1) ◽  
pp. 47
Author(s):  
Michael Amoh Asiedu ◽  
David Kwabla Adegbedzi ◽  
Richard Oduro ◽  
Sulemana Iddrisu
Keyword(s):  
Negative Correlation ◽  
Stock Exchange ◽  
Manufacturing Firms ◽  
Net Income ◽  
Capital Management ◽  
Working Capital ◽  
Working Capital Management ◽  
Return On Equity ◽  
Ghana Stock Exchange ◽  
Management Effect

Purpose: This paper seeks to assess working capital management effect on Return on Equity (net income (EAITP)/Equity) of listed manufacturing firms on the Ghana Stock Exchange (GSE). Methodology: The research design employed was descriptive as well as referential analysis. A panel data of thirteen (13) listed manufacturing firms on the Ghana Stock Exchange (GSE) for periods 2010 to 2019 was used for the study. Data which were the audited annual financial reports were accessed from Ghana Stock Exchange Fact Book and the web portals of the firms. Statistical Package for Social Sciences (SPSS, version 20) and Microsoft Excel were used in data analyses and presentations. Descriptive statistics was used to summarize the data in terms of measures of central tendency (mean), measures of dispersion (standard deviation) as well as minimum and maximum values. Pearson’s Product-Moment Correlation and Ordinary Least Square (OLS) multiple regression techniques were employed to establish the relationship and effect of working capital management on Return on Equity respectively.    Findings: Results showed that INV has statistically significant and negative correlation with ROE(r= -0.287 and p<0.05) as AR and ROE have statistically significant and negative correlation(r= -0.287, p<0.05). AP also has statistically significant and negative association with ROE(r= -0.407, p<0.05). The regression analysis showed that INV has a negative (β = -.01) and significant (p<0.05) effect on ROE as AR also has a negative (β = -.002) and significant (p<0.05) effect on ROE. Again, AP has negative (β = -.002) but insignificant (p>0.05) effect on ROE as CCC has statistically significant (p<0.05> and negative (-0.021) effect on ROE. Also, R and R-Sq. showed 59.5 % and 35.4% respectively, implying that the model is fit for predicting the criterion variable at any given levels of the predictor variables. Contribution to theory, practice and Policy: This work adds to working capital management literature by adopting ROE (Net Income (EAITP)/Total Equity) that responds to call by CFI (2015), and therefore addresses the pitfalls in prior studies. It is therefore a sine qua non for management, policy makers and practitioners to fashion strategies to ensure that working capital is managed to the core by reducing number of days inventory, number of days accounts receivable, number of days accounts payables and cash conversion cycle in order to create wealth for shareholders as well as expand operation of the firms.

scholarly journals Cash Conversion Cycle and Profitability, Evidence from Jordan

2019 ◽  
Vol 11 (2) ◽  
pp. 81
Author(s):  
Manar Moffadi Al-Mohareb
Keyword(s):  
Stock Exchange ◽  
Theoretical Aspect ◽  
Practical Aspect ◽  
Manufacturing Firms ◽  
Capital Management ◽  
Working Capital ◽  
Working Capital Management ◽  
Cash Conversion Cycle ◽  
Amman Stock Exchange ◽  
The Impact

This study investigates the impact of working capital management and its components on profitability as a practical aspect, and how is compatible with the theoretical aspect. Besides, it examines other financial factors that may affect profitability by using a sample of Jordanian manufacturing firms listed in the Amman Stock Exchange for the period (2016-2018). Theoretically, manufacturing firms that have been studied have current assets over half of their total assets. Therefore, the working capital management role will be clearer on firm profitability.Practically, the results indicate that there is a significant relationship between the cash conversion cycle, which is considered as a proxy of working capital management, and profitability of the manufacturing firms. This provides an opportunity to create value for shareholders by decreasing receivable accounts and inventory, enhancing the profitability of the firms and reducing the collection period and by adopting effective credit policy.

scholarly journals Is working capital management able to increase sustainable growth through asset utilization?

2020 ◽  
Vol 17 (2) ◽  
pp. 136-146
Author(s):  
Yekti Kinasih ◽  
Rambu Dorkas ◽  
Supramono Supramono
Keyword(s):  
Stock Exchange ◽  
Manufacturing Firms ◽  
Sustainable Growth ◽  
Capital Management ◽  
Working Capital ◽  
Working Capital Management ◽  
Panel Data Regression ◽  
Data Regression ◽  
Strategic Role ◽  
The Relationship

Working capital management has a strategic role to maintain a balance between liquidity and profitability so that firms have greater opportunities to operate sustainably. This study mainly aims to investigate the ability of working capital management to increase sustainable growth through asset utilization. We ran panel data regression on manufacturing firms listed in the Indonesian Stock Exchange for the years of 2010-2017 as our sample. By controlling for leverage, sales growth, and firm size, our empirical results demonstrate that working capital management negatively affects firms' asset utilization. Furthermore, the study also finds that asset utilization positively affects sustainable growth. Finally, we empirically show that asset utilization mediates the relationship between working capital management and sustainable growth. The findings imply that if Indonesian manufacturing firms manage to have efficient working capital management, they are more likely to utilize their assets efficiently which, in turn, will increase their growth optimally, without causing problems to their cash.

scholarly journals Working Capital Management (WCM) and Firm Performance in Emerging Markets: A Case of Bangladesh

2021 ◽  
Vol 10 (1) ◽  
pp. 36
Author(s):  
Rafiqul Bhuyan ◽  
Mohammad Sogir Hossain Khandoker ◽  
Noshin Tasneem ◽  
Mahjuja Taznin
Keyword(s):  
Stock Exchange ◽  
Secondary Data ◽  
Total Asset ◽  
Capital Management ◽  
Working Capital ◽  
Return On Assets ◽  
Working Capital Management ◽  
Cash Conversion Cycle ◽  
Current Asset ◽  
The Impact

We examine the impact of efficient working capital management on market value and profitability. Using secondary data on selected firms from Dhaka Stock Exchange we explore the effects of various working capital components (i.e. cash conversion cycle (CCC), current ratio (CR), current asset to total asset ratio (CATAR), current liabilities to total asset ratio (CLTAR), debt to asset ratio (DTAR), siz,e and growth) to the firm’s performance by looking firm’s value i.e. Tobin’s Q (TQ) and profitability i.e. return on asset (ROA) and return on invested capital (ROIC). Our results show that, for both food and overall manufacturing sectors, there is a significant association between working capital variables and firm’s value & return on assets, but an insignificant association with return on invested capital.

scholarly journals Impact of Working Capital Management on Financial Performance of Firms: Evidence from Pakistani Firms

2019 ◽  
Vol 5 (2) ◽  
pp. 24
Author(s):  
Sarfaraz Bhutto ◽  
Zulfiqar Ali Rajper ◽  
Riaz Ahmed Mangi ◽  
Ikhtiar Ali Ghumro
Keyword(s):  
Financial Performance ◽  
Multiple Regression ◽  
Negative Impact ◽  
Positive Impact ◽  
Stock Exchange ◽  
Manufacturing Firms ◽  
Capital Management ◽  
Working Capital ◽  
Working Capital Management ◽  
Independent Variable

This study aims to investigate the impact of working capital management on the financial performance of firms. We have taken non-financial sector which is listed in Pakistan stock exchange (PSX) over the period of 2010 to 2015. We have sampled 50 firms listed is PSX. The secondary data is being collected from the publication of State bank of Pakistan (SBP) “Financial Statement analyses of Non-financial sector listed in Pakistan stock exchange 2010-2015”. Furthermore, we have used purposive sampling method to choose the selective firms in manufacturing industry of Pakistan. Moreover, Pearson correlation and multiple regression are used as data analyses techniques. The study variables consist working capital management as independent variable and financial performance as dependent variable. We have used proxies to compute independent variable like Average payment period (APP), inventory turnover (ITO), cash conversion cycle (CCC) and average collection period (ACP). Moreover, financial performance (dependent variable) measured as earnings per share (EPS), return on equity (ROE) and return on assets (ROA). It is observed in the results that there is significant and negative impact of APP and ITO on ROA but two independent variables CCC and ACP have significant and positive impact on ROA. Moreover, it is found that CCC, APP and ITO have significant and negative impact on ROE and EPS respectively. Lastly, it is observed that ACP has a significant and positive impact on ROE and EPS. The results of multiple regression investigated that the financial performance of Pakistani manufacturing firms is consistent with WCM. This study supports in managing the working capital requirements to boost firm performance in general. Moreover, specifically in the context of Pakistani manufacturing firms the study implications are significant in expansion and betterment of financial performance of firms

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