scholarly journals Key factors in working capital management in the Brazilian market

2012 ◽  
Vol 52 (1) ◽  
pp. 55-69 ◽  
Author(s):  
Nathalie Vicente Nakamura Palombini ◽  
Wilson Toshiro Nakamura
Keyword(s):  
Balance Sheet ◽  
Internal Variables ◽  
Capital Management ◽  
Key Factors ◽  
Working Capital ◽  
Public Companies ◽  
Working Capital Management ◽  
Financing Decisions ◽  
Investment And Financing

Many studies have been conducted in corporate finance regarding long-term investment and financing decisions. However, short-term asset investments play a significant role in the balance sheet of companies. Moreover, financial managers dedicate significant amounts of time and effort to the subject of working capital management, balancing current assets and liabilities. This paper provides insights regarding the key factors of working capital management by exploring the internal variables of a number of companies. This study used data from 2,976 Brazilian public companies from 2001 to 2008, and found that debt level, size and growth rate can affect the working capital management of companies.

Do working capital management practices influence investment and financing patterns of firms?

2020 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Ahsan Akbar ◽  
Xinfeng Jiang ◽  
Minhas Akbar
Keyword(s):  
Capital Structure ◽  
Negative Relationship ◽  
Capital Management ◽  
Working Capital ◽  
Short Term ◽  
Working Capital Management ◽  
Content Type ◽  
Investment And Financing ◽  
The Impact

PurposeThe present study aims to investigate the impact of working capital management (WCM) practices on the investment and financing patterns of listed nonfinancial companies in Pakistan for a span of 10 years.Design/methodology/approachThe study is based on secondary financial data of 354 listed nonfinancial Pakistani firms during the period of 2005–2014. The two-step generalized method of moment (GMM) regression estimation technique is employed to ensure the robustness of results.FindingsEmpirical testing reveals that: excessive funds tied up in working capital have a negative impact on the investment portfolio of sample firms. Besides, a negative relationship between change in fixed assets and excess net working capital posits that, eventually, firms use idle resources tied up in short-lived assets to boost their investment activities. Furthermore, larger working capital levels were associated with higher leverage ratio which indicates that firms with inefficient WCM policies have to rely heavily on long-term debt to meet their short-term financing requirements. Additional results indicate that firms that take more time to sell inventory and convert receivables to cash, make more use of debt. Results of cash management models illustrate that cash-rich firms have lower leverage levels which signal the strong financial health and internal revenue generation capability of such firms.Originality/valueThere is a dearth of empirical studies that examine the implications of WCM decisions on a firm's capital structure. Besides, these studies are only confined to how a WCM policy influences the long-term investment activities of a firm. The research contributes to the extant literature by empirically revealing a link between the WCM practices and the firm's long-range investment and financing patterns. Hence, financial managers shall account for the impact of their short-term financial management decisions on the capital structure of the firm.

Finance Strategies for Medium-Sized Enterprises

2021 ◽  
pp. 1323-1345
Author(s):  
Chen Liu
Keyword(s):  
Best Practice ◽  
Balance Sheet ◽  
Investment Decisions ◽  
Capital Management ◽  
Working Capital ◽  
Working Capital Management ◽  
Artificial Intelligent ◽  
Blockchain Technology ◽  
Supply Chain Finance ◽  
Future Work

This chapter discusses how FinTech—technology-enabled financial solutions and services—can optimize finance strategies of medium-sized enterprises. Using a balance sheet model, the chapter integrates medium-sized companies' financing strategies, working capital management, and investment decisions and discusses FinTech solutions in each area to suggest best practice. Specifically, the chapter first discusses how crowdfunding and its different types could provide alternative financing for medium-sized enterprises. Second, FinTech solutions for online payment and transfer, invoice finance, supply chain finance, and trade finance help medium-sized enterprises optimize their working capital management. Third, blockchain technology and artificial intelligent (AI)-based decisions tools could potentially help medium-sized businesses optimize their decision-making process. This chapter also suggests future work that will allow us to better understand FinTech applications in medium-sized enterprises.

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 Working Capital Management Efficiency of Cement Sector of Pakistan

2011 ◽  
Vol 2 (5) ◽  
pp. 223-235 ◽  
Author(s):  
Talat Afza
Keyword(s):  
Efficiency Index ◽  
Total Efficiency ◽  
Target Level ◽  
Capital Management ◽  
Working Capital ◽  
Short Term ◽  
Working Capital Management ◽  
Financial Decisions ◽  
Capital Efficiency

The corporate finance literature has traditionally focused on the study of long-term financial decisions. Researchers have particularly examined investments, capital structure, dividends or company valuation decisions, among other topics. However, short-term assets and liabilities are important components of total assets and needs to be carefully analyzed. Management of these short-term assets and liabilities warrants a careful investigation since the working capital management plays an important role for the firm’s profitability and risk as well as its value. It requires continuous management to maintain proper level in various components of working capital i.e. cash, receivables, inventory and payables etc. The present study is an attempt to evaluate the efficiency of the working capital management of cement sector of Pakistan for the period 1988-2008. Instead of employing the traditional ratios; working capital efficiency has been measured in terms of utilization index, performance index and total efficiency index as suggested by Bhattacharya (1997). This paper also tests the speed of achieving the target level of efficiency by an individual firm during the period of study using industry norms as the target level of efficiency. Findings of the study indicate that the cement sector as a whole did perform well during the study period.

Working capital management and managerial talent

2020 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Nacasius U. Ujah ◽  
Augustine Tarkom ◽  
Collins E. Okafor
Keyword(s):  
Social Capital ◽  
Financial Constraints ◽  
Capital Management ◽  
Working Capital ◽  
Short Term ◽  
Working Capital Management ◽  
Content Type ◽  
Cash Conversion Cycle ◽  
Managerial Talent

PurposeTalented managers arguably remain quintessential to firm value and performance. While the literature offers evidence for the long-term orientation of talented managers, there is a paucity of evidence on the short-term performance of managers. Here, we examine the relationship between managerial talent and working capital management (WCM).Design/methodology/approachThis study primarily employs a panel fixed-effect method controlling for firm-year and firm-industry for non-financial and non-utility firms for the years 1980 through 2016. Also, the authors control of potential bias that may impact the result. These controls include social capital, financial constraints and tests for endogeneity and spurious correlation.FindingsThe authors find the association between managerial talent and WCM to be positive and significant. The results indicate that talented managers have a higher cash conversion cycle. The empirical evidence still holds after controlling for social capital, religiosity and financial constraints. Also, the evidence still holds by employing an interaction term between Tobin's Q as a proxy for investment opportunities and talented managers.Practical implicationsThe finding may lend credence to executive contracts. Human nature, by default, is only vested on a net benefit for self-aggrandization. Self-aggrandization can be evident through structures in managerial contracts. These contracts usually tie consequences to long-term growths. If a benefit is offered based on short-term operational goals, talented managers may do more to the management of working capital.Originality/valueIn the managerial talent literature, talents reflect a holistic picture of one that can succeed in both the short-term and long-term goals of a company. Here, the authors show that talented managers are inefficient in meeting short-term goal – working capital management. Thus, the authors add to the research by providing evidence that talented managers are myopic.

scholarly journals Working Capital Management in Blue Bharath Exim Pvt.Ltd, Chennai

2019 ◽  
Vol 8 (2S8) ◽  
pp. 148-152
Keyword(s):  
Excessive Amount ◽  
Future Research ◽  
Capital Management ◽  
Working Capital ◽  
Short Term ◽  
Working Capital Management ◽  
The Future ◽  
Administration Procedure

Working capital is the distinction between current resources and current liabilities, which is a piece of capital that needn't to satisfy for the time being. That is, working capital mirrors the overall security of short-term capital. We can be educated on the endeavor's money related hazard, by the benefit of working capital and some related pointers. By and large, the additionally working capital endeavors possess, the less budgetary hazard they may confront. Be that as it may, an excessive amount of working capital isn't reasonable for the undertakings who wish a long-term advancement, as the lost benefit. We propose to improve the working capital administration, for its significance and money related vigor. Notwithstanding, there are seldom looks into associated with developing a working capital administration framework. [1],[ 3],[5] To consummate the administration procedure, we propose an effective working capital administration framework on execution, which might be a changing cycle. We would like to give a reference to the future research and the board rehearses

scholarly journals A Study on Working Capital Management at EID Parry

2020 ◽  
Vol 6 (7) ◽  
pp. 37-41
Keyword(s):  
Balance Sheet ◽  
Secondary Data ◽  
Vital Role ◽  
Capital Management ◽  
Working Capital ◽  
Working Capital Management ◽  
Turnover Ratio ◽  
Business Operations ◽  
Current Asset ◽  
Asset Turnover

The working capital management has an important role for the firm’s success or failure because of its effect on firm’s performance and liquidity. A well designed and implemented working capital management is expected to contribute positively to the creation of a firm’s value. “Working Capital” is the capital invested in different items of current assets needed for the business, viz, inventory, debtors, cash and other current assets such as loans & advances to third parties. Those current assets are essential for smooth business operations and proper utilization of fixed assets. The study is descriptive in nature. The secondary data is used for this study and four years balance sheet. The Working Capital Turnover Ratio, Current Asset Turnover Ratio, Probability Ratio. It was concluded that the working capital is a vital role of an organization

scholarly journals Working Capital Management and Firms’ Profitability: Evidence from Vietnam’s Stock Exchange

2016 ◽  
Vol 8 (5) ◽  
pp. 55 ◽  
Author(s):  
Huy-Cuong Nguyen ◽  
Manh-Dung Tran ◽  
Duc-Trung Nguyen
Keyword(s):  
Supply Chain ◽  
Stock Exchange ◽  
Listed Companies ◽  
Capital Management ◽  
Working Capital ◽  
Short Term ◽  
Public Companies ◽  
Working Capital Management ◽  
Cash Conversion Cycle ◽  
Macroeconomic Effects

<p>The paper investigates what effect Working Capital Management has on firms’ profitability by using the data from listed companies on Vietnamese Stock Exchange. The sample is collected from 127 public companies for the period of 9 years from 2006 to 2014. The research uses four variables to represent Working Capital Management, which are Day of Sales Outstanding (DSO), Day Sales of Inventories (DSI), Day of Payables Outstanding (DPO), and Cash Conversion Cycle (CCC). Moreover, in order to robust the result, the study also takes into the account the following variables: “Leverage, Growth, Tangibility, Size, Industrial Factors, and Macroeconomic Effects”, which were proven to have significant effects on firms’ profitability. The result implies that there is no correlation between Working Capital Management and firms’ profitability. Hence the conclusion is that Working Capital Management can help companies solve the short-term obligations and improve the efficiency by improving the supply chain and credit policies, however it has nothing to do with firms’ profitability of the companies in the sample.</p>

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