scholarly journals The Impact of Working Capital Management on Profitability of Croatian Software Companies

2018 ◽  
Vol 21 (1) ◽  
pp. 47-66 ◽  
Author(s):  
Dina Korent ◽  
Silvije Orsag
Keyword(s):  
Optimal Level ◽  
Capital Management ◽  
Working Capital ◽  
Return On Assets ◽  
Working Capital Management ◽  
Macroeconomic Conditions ◽  
Software Companies ◽  
Software Firms ◽  
The Impact ◽  
A Company

Abstract The idea that working capital management impacts profitability and risk of a company is generally accepted and in last 10-15 years has acquired a substantial interest. Accordingly, from the aspect of the measure of efficiency of working capital management, the objective of this paper is to evaluate working capital management impact on profitability of Croatian software companies. This impact was examined using descriptive and correlation as well as panel regression analysis for six-year period (2008-2013). The results show that after controlling for characteristics of the company and macroeconomic conditions working capital management significantly affects the profitability of Croatian software firms. Moreover, the results imply the existence of a nonlinear, concave quadratic relationship between the net working capital and return on assets. This suggest the existence of an optimal level of net working capital that balances costs and benefits and maximizes profitability of analysed companies.

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 An Analysis of Proposed Framework on Impact of Working Capital Management on the Profitability of Selected Manufacturing Companies Listed on the Nigerian Stock Exchange

2012 ◽  
Vol 4 (12) ◽  
pp. 730-736 ◽  
Author(s):  
Yusuf Aminu
Keyword(s):  
Inventory Management ◽  
Business Strategy ◽  
Trade Credit ◽  
Stock Exchange ◽  
Optimal Level ◽  
Manufacturing Companies ◽  
Capital Management ◽  
Working Capital ◽  
Working Capital Management ◽  
The Impact

Working capital management encompasses the overall idea of management of current assets and current liabilities of a business. Whether empirical or conceptual, the discussion have delineated working capital management as that part of business strategy which involves effective management of short term or current assets and liabilities to ensure optimal level and maximization of value. This paper aims to provide an analysis on the concept and propose framework that emphasizes on investigating the impact of management of working capital on the profitability of manufacturing companies listed on the Nigerian stock exchange. The paper proposes four dimensions (variables) as cash management levels, inventory management levels, receivable management, and the trade credit (Accounts payable) as measures of working capital management and the profitability of companies.

The Impact of Working Capital Management on Firm Operational Performance Through Business Cycles

2021 ◽  
pp. 199-217
Author(s):  
Inês Lisboa ◽  
Nuno Miguel Teixeira
Keyword(s):  
Economic Growth ◽  
Business Cycles ◽  
Economic Downturn ◽  
Capital Management ◽  
Working Capital ◽  
Return On Assets ◽  
Working Capital Management ◽  
Cash Conversion Cycle ◽  
International Financial Crisis ◽  
The Impact

This chapter aims to analyze the impact of working capital management on firm's profitability, considering economic downturn and boom periods. Analyzing Portuguese firms from 2006-2019 results show that cash conversion cycle, as well as days sales outstanding, days sales inventories, and days payment outstanding decreased after 2009 due to the international financial crisis. When the length of cash conversion cycle increases, firm return on assets also increases. This situation happens especially in recession periods, when sales decrease. Results also exhibit singularities across industries. In some sectors, the impact of working capital management in firm return is positive, while in industries with greater cash conversion periods, the impact is negative. The findings also reveal the impact of financial debt and economic growth on operational profitability. Managers need to focus on short-term financing practices to increase firm profits and create value.

Working Capital Management and Firm Performance: Evidence from Non-Financial Firms in Pakistan

2019 ◽  
Vol 9 (2) ◽  
pp. 27-37
Author(s):  
Mohsin Siraj ◽  
Muhammad Mubeen ◽  
Salman Sarwat
Keyword(s):  
Inventory Management ◽  
Stock Exchange ◽  
Capital Management ◽  
Working Capital ◽  
Return On Assets ◽  
Working Capital Management ◽  
Return On Equity ◽  
Financial Firms ◽  
Asset Growth ◽  
The Impact

This study analyzes the effects of Working Capital management i.e. inventory management, receivable management and payable management, on the performance of the non-financial firms in Pakistan. Panel data of 280 nonfinancial firms enlisted in Pakistan Stock Exchange have been analyzed from 2000 to 2016. Firms’ profitability were proximate with return on assets and return on equity; whereas for growth i.e. sales growth and asset growth were used. The impact of Working Capital management is captured through its constituent policies such as Inventory management, Receivable Management and Payable management. Firm size, liquidity and leverage are used as control variables. Results suggest that Working Capital management has a significant impact on firms’ financial performance in terms of profitability, as well as growth. As far as component wise results are concerned, inventory management does influence the firms’ growth and Payable management significantly, hence affecting the firms’ profitability. However, only receivable management influences both profitability and growth.

scholarly journals Two Dimensional Analyses for the Company’s Profitability Under the Working Capital Management: Evidence From Egypt

2020 ◽  
Vol 10 (1) ◽  
pp. 13
Author(s):  
Amira Hassaneen
Keyword(s):  
Panel Data Analysis ◽  
Financial Assets ◽  
Two Dimensional ◽  
Capital Management ◽  
Working Capital ◽  
Return On Assets ◽  
Working Capital Management ◽  
The Impact ◽  
Real Assets ◽  
Financial Profitability

The current study focused on the impact of working capital management on the financial profitability of Egyptian companies which lasting at EGX according two dimensional analyses; these dimensional are real assets level measured according to "Return on Assets" with financial assets level measured according to "TOBIN Q" during 2011 to 2018 for 23 companies.The study used unbalanced panel data analysis to examining the impact of the working capital management on the profitability. Finally, the study found two dimensional for the impact of working capital management and corporate's profitability; first according to Cost-Benefits analysis at real assets level measured through "Return on Assets"; second according to Risk Return Trade Off at financial assets level measured through "TOBIN Q".

scholarly journals The Impact of Working Capital Management on Corporate’s Performance: Evidence from Egypt

2020 ◽  
Vol 15 (6) ◽  
pp. 151
Author(s):  
Yasmeen Tarek ◽  
Mary Rafik
Keyword(s):  
Data Analysis ◽  
Financial Management ◽  
Panel Data Analysis ◽  
Corporate Value ◽  
Capital Management ◽  
Working Capital ◽  
Return On Assets ◽  
Working Capital Management ◽  
Wealth Maximization ◽  
The Impact

Financial management has two main objectives profit and wealth maximization, well organized management of WC components should contribute to the achievement of these objectives. This study clarified the factors which affect WCM, which consequently will affect the business health as a whole and this will influence corporate ’performance and its corporate value. The study will examine the relation between firms profitability and its corporate value by applying panel data analysis on16 companies registered in the Egyptian stock market during the period from 2013 to 2017.The performance of companies is measured through profitability using return on assets (ROA) and firms value were measured by Tobin’s Q (TQ) ratio. The working capital management was measured by using current assets ratio (CAR), quick ratio (QR) and cash ratio (CR).

scholarly journals Does working capital management affect the profitability of commercial banks: the case of Kosovo

2020 ◽  
Vol 9 (1) ◽  
pp. 126
Author(s):  
Ibish Mazreku ◽  
Fisnik Morina ◽  
Florentina Zeqaj
Keyword(s):  
Commercial Banks ◽  
The Other ◽  
Debt Ratio ◽  
Capital Management ◽  
Working Capital ◽  
Return On Assets ◽  
Current Ratio ◽  
Bank Profitability ◽  
Working Capital Management ◽  
The Impact

Purpose: This paper aims to analyze working capital and its impact on the profitability of commercial banks. The other objectives of this study are to analyze the factors that influence the profitability of commercial banks, to find out the relationship between profitability and working capital management. To achieve these research objectives, several research questions have been posited: How much does working capital affect the profitability of commercial banks? What are the relationships between bank profitability and bank size, debt ratio and current ratio? What are the other factors affecting the profitability of commercial banks? Methodology: The empirical data to be used in this research are secondary data and will be based on annual reports of commercial banks and reports of the Central Bank of Kosovo. From these data, some indicators such as return on assets, current ratio, debt ratio and banks’ size will be calculated. This research covers a period of 5 years and the data will be analyzed and interpreted through econometric models. In addition, to analyze the impact of working capital on the profitability of commercial banks in Kosovo, trend analysis will also be applied through the comparative method. Findings: Based on the empirical results, we can conclude that bank size and the current ratio have positively affected the performance of commercial banks in Kosovo, whereas the debt ratio has had a negative effect. All the independent variables in relation to the dependent variable (ROA) are at the standard level of significance P-value = 0.05. Practical implications: Through this study we can recommend all commercial banks in Kosovo to invest much more in working capital, since financial investments in working capital affect the bank's profitability. This means that a high investment in the elements of working capital can lead to increased bank profitability, whereas its profitability decreases when investment in working capital is low. Originality: This paper presents real and sustainable results with respect to the conclusions. The period analyzed (2013-2017) is a persuasive period for drawing competent conclusions and recommendations.  Keywords: working capital, debt ratio, current ratio, bank size, return on assets JEL Classification: G2, G20, G21, G3, G32, D24

scholarly journals Working Capital Management and Its Impact on Firms’ Performance: An Empirical Analysis on Ethiopian Exporters

2021 ◽  
Vol 2021 ◽  
pp. 1-10
Author(s):  
Fekadu Agmas Wassie
Keyword(s):  
Return On Investment ◽  
Positive Impact ◽  
Multiple Linear Regression Model ◽  
High Volume ◽  
Capital Management ◽  
Working Capital ◽  
Return On Assets ◽  
Working Capital Management ◽  
Cash Conversion Cycle ◽  
The Impact

Companies may have their level of optimal working capital that maximizes their values through the effective management of current liabilities and assets. Previously, many studies were made on the impact of working capital management on the company’s performance in different sectors; however, its impact on the performance of firms that are engaged in export activities was not given any consideration and this particular study has attempted to investigate the fundamental impact of working capital management on the export firm’s performance in Ethiopia. To analyze this particular study, a total of 164 exporters operating in Ethiopia have been taken as a sample and both primary and secondary data collection methods were used. The data gathered from the sample of the study were analyzed using a multiple linear regression model and the result reveals that working capital management which was measured by account receivables period, cash conversion cycle, and accounts payable period has a statistically significant and positive correlation with the performance of exporting firms in Ethiopia which was measured by both return on assets and return on investment. However, working capital management which was measured by the inventory conversion period has a statistically significant and positive impact on return on investment, but it has an insignificant impact on the performance of sampled export firms in Ethiopia which was measured by return on assets. Based on the result of the study, firms may need to extend credit terms for customers, may prolong their cash conversion cycle, may need an extended payment period, and may or may not hold a high volume of inventory. All extending periods and cycles shall be made up to the extent of attaining an optimal level of working capital and better to implement a conservative policy of working capital management. Thus, it is advisable to consider the result of this study while making decisions regarding their working capital management to support their performance.

The Relationship Between Working Capital Management and Profitability: Evidence from South African Retail and Construction Firms

2019 ◽  
pp. 097215091986510 ◽  
Author(s):  
E. Louw ◽  
John H. Hall ◽  
Rudra P. Pradhan
Keyword(s):  
South African ◽  
Inventory Management ◽  
Capital Management ◽  
Working Capital ◽  
Return On Assets ◽  
Causality Test ◽  
Working Capital Management ◽  
Construction Firms ◽  
Long Run ◽  
The Impact

This article examines and contrasts the long-run relationship between the working capital management and profitability of South African firms in the retail and construction industries over the period 2004–2015. Techniques used in the study included the cointegration technique as well as a Granger causality test. The study found evidence of a long-run relationship between working capital management and the profitability of a firm in most of the cases. Further to this, the presence of both unidirectional and bidirectional causality between working capital management and profitability was found. In addition, results presented in this study indicate that working capital management has a greater impact on the profitability of retail firms than construction firms. The value of the study lies in the fact that management in different industries should realize that working capital management will have an impact on different profitability measures, for example, inventory management in the construction industry will have the biggest impact on return on assets, whilst in the retail industry the impact of inventory management will be most significantly on the gross profit margin compared to other profitability ratios.

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.

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