scholarly journals IMPACT OF AGGRESSIVENESS OF WORKING CAPITAL MANAGEMENT ON FIRM'S PROFIT

2019 ◽  
Vol 7 (3) ◽  
pp. 612-618
Author(s):  
Dr. Khurram Sultan ◽  
Muhammad Muzammal Murtaza
Keyword(s):  
Stock Exchange ◽  
Capital Management ◽  
Working Capital ◽  
Current Ratio ◽  
Working Capital Management ◽  
Independent Variables ◽  
Cash Conversion Cycle ◽  
Maximum Profit ◽  
The Cost ◽  
The Impact

Purpose of Study: The study intends to analyze the fact that whether it is better to be aggressive or conservative in formulating strategies for working capital management. The main objective of any firm is to earn the maximum profit but caring for the liquidity is also an important element. Profit of the firm can be increased, the problem comes when profit increases at the cost of liquidity. Methodology: The data we have collected is from Karachi stock exchange (61 companies) in Pakistan for the time tenure of 6 years (2013-2018). Results: This study explores the impact of aggressiveness of working capital management on the firm's profit. Implications/Applications: According to our analysis while considering the Current ratio and Cash conversion cycle as independent variables, there is a significant impact of Current ratio on the firm's profit.

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 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 Working Capital Management and the Profitability of Non- Financial Firms Listed on the Zimbabwe Stock Exchange (ZSE)

2014 ◽  
Vol 9 (1) ◽  
Author(s):  
Walter Gachira ◽  
Washington Chiwanzwa ◽  
Dingilizwe Jacob Nkomo ◽  
Runesu Chikore
Keyword(s):  
Firm Value ◽  
Positive Relationship ◽  
Stock Exchange ◽  
Negative Relationship ◽  
Capital Management ◽  
Working Capital ◽  
Working Capital Management ◽  
Financial Firms ◽  
Cash Conversion Cycle ◽  
The Impact

Working capital is essential for the day-to-day operations of a firm. The study examines the impact of working capital management on the profitability of non-financial firms listed on the Zimbabwe Stock Exchange (ZSE). Using panel data methodology, the direction and extent of the impact of working capital management on profitability is scrutinised. The regression analysis is based on a panel sample of 39 non-financial firms listed on the ZSE from 2009 to 2013, the period under which the Zimbabwean economy has been operating under the multicurrency system. It was found that there is a positive relationship between debtors’ days and firm’s profitability, a negative relationship between creditors’ days and profitability and a positive relationship between firm’s cash conversion cycle and its profitability. There is some negative relationship between current ratio and profitability, while inventory turnover days and profitability are positively related. Debt to asset ratio as a control variable has a significant negative relationship with firm value and profitability. The results of the study show that for the companies included in the sample, there are mixed effects of the components of working capital on firm performance. Managers can thus create value for shareholders by taking note of the existence of such relationships and take measures that enhance firm profitability.

Effects of Working Capital Management on Profitability: A Case of Nepalese Manufacturing Firms

2021 ◽  
Vol 5 (1) ◽  
pp. 130-147
Author(s):  
Phadindra Kumar Poudel ◽  
Pujan Maharjan
Keyword(s):  
Significant Relationship ◽  
Stock Exchange ◽  
Capital Management ◽  
Working Capital ◽  
Current Ratio ◽  
Cross Sectional ◽  
Working Capital Management ◽  
Listed Firms ◽  
Financial Firms ◽  
Cash Conversion Cycle

The study deals with the relationship between firm characteristics of working capital management and firm profitability in Nepal. It examines if firm performance, return on assets is related to cash conversion cycle, days’ sales outstanding, days’ inventory outstanding and current ratio. The study is based on pooled cross-sectional data of 10 non-financial firms from 2071/72 to 2075/76 of listed firms in the Nepal Stock Exchange. The study employed descriptive and causal-comparative research design to attainthe purpose of this study. The result reveals that the current ratio has a positively significant relationship with profitability and days’ sale outstanding has negatively significant relationship with the financial performance of the firm.

scholarly journals THE IMPACT OF WORKING CAPITAL MANAGEMENT TO PROFITABILITY OF MANUFACTURING COMPANY LISTED IN INDONESIAN STOCK EXCHANGE

2018 ◽  
Vol 2 (1) ◽  
pp. 1
Author(s):  
Valiensi Utia ◽  
Nanny Dewi ◽  
H. Sutisna
Keyword(s):  
Stock Exchange ◽  
Linear Regression Analysis ◽  
Analysis Tool ◽  
Manufacturing Companies ◽  
Capital Management ◽  
Working Capital ◽  
Working Capital Management ◽  
Cash Conversion Cycle ◽  
Manufacturing Company ◽  
The Impact

ABSTRACT Manufacturing companies in Indonesia are increasing in number in recent years. Large growth should be balanced with good working capital management due to the manufacturing company is carrying out buying of raw material activity, afterward convert them into semi-finished goods and finished goods. Cycles from purchasing goods, inventory management, debt repayment, product sales, cash received will have effect on profitability.Purpose of this study to determine whether working capital management affect profitability of manufacturing companies publicly listed on Indonesian Stock Exchange from 2010-2015. This study uses quantitative method by using linear regression analysis tool on panel data.Results of this study found that the component of working capital proved to affect profitability of manufacturing companies Listed in Indonesian Stock Exchange. Therefore the companies should be able to manage properly their working capital. Manufacturing companies should improve their management pattern applied to their current assets and current liabilities. Working capital management should be performed by shortening cash conversion cycle, debt withholding, and by increasing current assets value due to it proves to be able to improve profitability of the company.

scholarly journals The Impact of Working Capital Management on Firm Value: Evidence from a Frontier Market

2018 ◽  
Vol 9 (2) ◽  
pp. 399
Author(s):  
A.N. Hingurala Arachchi ◽  
Wasantha Perera ◽  
Ratnam Vijayakumaran
Keyword(s):  
Firm Value ◽  
Fixed Effects ◽  
Stock Exchange ◽  
High Growth ◽  
Capital Management ◽  
Working Capital ◽  
Working Capital Management ◽  
Cash Conversion Cycle ◽  
Value Effect ◽  
The Impact

Corporate finance literature and finance practitioners have the notion that the efficient working capital management (WCM) affects firm value. This study investigates the value effect of working capital management, using a sample of 44 listed companies on the Colombo Stock Exchange (CSE) over the period 2011-2015. The CSE is currently recognized as a high growth frontier market (FM) in the world.  The efficiency of WCM is measured using the Cash Conversion Cycle (CCC) and its components while firm value is measured by the Tobin Q ratio. The firm size, leverage and sales growth are used as the control variables. Using panel data regression methodology (the pooled OLS and fixed effects regressions), the study finds that CCC is inversely related to Tobin Q, suggesting that managers can create value for their shareholders by efficiently managing investment in working capital of their firms.

scholarly journals The Impact of Working Capital Management on Profitability: Evidence from the Listed Retail Stores in Botswana

2018 ◽  
Vol 4 (1) ◽  
pp. 85
Author(s):  
Sathyamoorthi C.R. ◽  
Mogotsinyana Mapharing ◽  
Popo Selinkie
Keyword(s):  
Stock Exchange ◽  
Financial Statements ◽  
Retail Stores ◽  
Capital Management ◽  
Working Capital ◽  
Return On Assets ◽  
Working Capital Management ◽  
Cash Conversion Cycle ◽  
Conversion Period ◽  
The Impact

This study focused on the effect of working capital management on the profitability of the listed retail stores in Botswana Stock Exchange for the period 2012-2016. Financial statements of the listed Retail Stores were used as the main source of data. Return on Assets was used as the dependent variable to measure profitability and the components to measure working capital management comprised of Average Collection Period, Inventory Conversion Period, Average Payment Period, Cash Conversion Cycle, Debt, Current and Quick Ratios. Correlation analysis revealed that a few variables were significantly correlated with each other. Average Payment Period and Inventory Conversion Period were found to be positively and significantly correlated and Cash Conversion Cycle was significantly and positively correlated with Inventory Conversion Period.The regression results showed that only three variables out of the seven independent variables were statistically significant, namely Average Payment Period, Current Ratio and Quick Ratio. The remaining four variables were found to be statistically insignificant.  The above findings have implications for the management of the listed retail store in Botswana.

scholarly journals Working Capital Management and Corporate Profitability: Empirical Evidences from Nepalese Manufacturing Sector

2020 ◽  
Vol 23 (1) ◽  
pp. 137-152
Author(s):  
Pitri Raj Adhikari
Keyword(s):  
Data Analysis ◽  
Manufacturing Firms ◽  
Debt Ratio ◽  
Capital Management ◽  
Working Capital ◽  
Current Ratio ◽  
Working Capital Management ◽  
Cash Conversion Cycle ◽  
Conversion Period ◽  
The Impact

 This research paper attempts to fill the gap regarding the working capital management of manufacturing firms in context of Nepal by providing empirical evidence, and moreover, this study act as foundation for future research activity because there are very few working capital management research literatures in Nepalese context. The secondary data for data analysis are retrieved from annual reports of five manufacturing firms for eight-year period from 2010/11 to 2017/18. This study examines the impact of different working capital components, i.e. inventory conversion period, receivable conversion period, payable deferred period, cash conversion cycle, debt ratio and current ratio, with profitability of a manufacturing firm, where profitability is represented by return on equity, return on assets and net income. Statistical tools used for data analysis are Pearson’s correlation, ordinary least square regression and binary logistic regression. Such that, this study found that, inventory conversion period, payable deferral period and cash conversion cycle are inversely related with the profitability of manufacturing firms, whereas, receivable conversion period , debt ratio and current ratio are positively related.

scholarly journals The Impact of Working Capital Management on Profitability: The Case of Small and Medium-Sized Export Companies in Tunisia

2011 ◽  
Vol 15 (3) ◽  
pp. 71-88 ◽  
Author(s):  
Meryem Bellouma
Keyword(s):  
Negative Relationship ◽  
Capital Management ◽  
Working Capital ◽  
Working Capital Management ◽  
Random Effects Models ◽  
Accounts Receivable ◽  
Cash Conversion Cycle ◽  
Fixed And Random Effects ◽  
Financial Decision ◽  
The Impact

Working capital is an important component in the financial decision of the company. An optimal working capital management is reached through a trade off between profitability and liquidity. This study aims to provide empirical evidence about the effects of working capital management on the profitability of 386 Tunisian export SMEs observed from 2001 to 2008. The results of fixed and random effects models show a negative relationship between corporate profitability and the different working capital components. This reveals that Tunisian export SMEs should shorten their cash conversion cycle by reducing the number of days of accounts receivable and inventories to increase their profitability.

scholarly journals The impact of Working Capital Management on shareholders’ wealth and profitability: evidence from Colombo Stock Exchange

2018 ◽  
Vol 15 (2) ◽  
pp. 104-115
Author(s):  
Wasantha Perera ◽  
Pradeep Priyashantha
Keyword(s):  
Firm Size ◽  
Regression Models ◽  
Stock Exchange ◽  
Negative Relationship ◽  
Least Square ◽  
Capital Management ◽  
Working Capital ◽  
Working Capital Management ◽  
Holding Period ◽  
The Impact

The Working Capital Management (WCM) has an important role for the firm’s success or failure, because it directly affects the overall business health of the firm. This study examined the impact of WCM on profitability and shareholders’ wealth using 50 companies listed in different sectors on the Colombo Stock Exchange (CSE) for the period from 2010 to 2015. This sample represents 47% of the selected sectors of CSE. The profitability of the company is measured using gross operating profit (GOP) and shareholders wealth measured by Tobin’s Q (TQ) ratio. The WCM is measured using five independent variables namely stock holding period (SHP), debtors’ collection period (DCP), creditors’ settlement period (CSP), cash conversion circle (CCC) and current assets ratio (CAR). Further, three additional variables such as firm size (SIZE), leverage (LEV) and earning yield (EY) are employed as controlling variables to capture the impact of other performance of the companies.The data were analyzed using ordinary least square (OLS) and panel data regression models. These regression models reveal that there is a significant negative relationship between CCC and dependent variables (GOP & TQ). Further, this relationship has been confirmed by the major components of CCC such as SHP, DCP. Firm size also positively and significantly effects on the firm GOP while negatively effects on the TQ. Further, they revealed that there is a significant positive relationship between LEV and TQ. The study finds that the shareholders’ wealth and profitability can be increased through the efficiency of WCM.

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