scholarly journals Efficiency of Working Capital Management and Profitability: Evidence from Manufacturing Firms of Nepal

2019 ◽  
Vol 22 (1) ◽  
pp. 21-34
Author(s):  
Pitambar Lamichhane
Keyword(s):  
Comparative Research ◽  
Manufacturing Firms ◽  
Fiscal Year ◽  
Regression Result ◽  
Capital Management ◽  
Working Capital ◽  
Current Ratio ◽  
Working Capital Management ◽  
Explanatory Variables ◽  
Dependent Variables

This paper analyzes efficiency of working capital management (EWCM) and its influence on profitability of manufacturing firms in Nepal for the fiscal year 2005/06 to 2017/18 using descriptive and causal comparative research design. Net trade cycle (NTC) is used to measure EWCM. Profitability on assets (PA) and profitability on sales (PS) are dependent variables of this study. The EWCM related variables such as Net trading cycle (NTC), current ratio (CR) and debt to assets ratio (DR) are considered as explanatory variables. Result of this paper reveals both profitability on assets and profitability on sales are inversely related with NTC which implies that lower NTC increases profitability of manufacturing firms in Nepal. Further, regression result of this paper confirms that debt to assets ratio has negative and statistically significant effect on profitability on total assets and profitability on sales. The finding of this paper concludes that less uses of debt increases the profitability of manufacturing firms in Nepal.

scholarly journals Efficiency of Working Capital Management and Profitability: Evidence from Manufacturing Firms of Nepal

2019 ◽  
Vol 22 (2) ◽  
pp. 21-34
Author(s):  
Pitambar Lamichhane
Keyword(s):  
Comparative Research ◽  
Manufacturing Firms ◽  
Fiscal Year ◽  
Regression Result ◽  
Capital Management ◽  
Working Capital ◽  
Current Ratio ◽  
Working Capital Management ◽  
Explanatory Variables ◽  
Dependent Variables

This paper analyzes efficiency of working capital management (EWCM) and its influence on profitability of manufacturing firms in Nepal for the fiscal year 2005/06 to 2017/18 using descriptive and causal comparative research design. Net trade cycle (NTC) is used to measure EWCM. Profitability on assets (PA) and profitability on sales (PS) are dependent variables of this study. The EWCM related variables such as Net trading cycle (NTC), current ratio (CR) and debt to assets ratio (DR) are considered as explanatory variables. Result of this paper reveals both profitability on assets and profitability on sales are inversely related with NTC which implies that lower NTC increases profitability of manufacturing firms in Nepal. Further, regression result of this paper confirms that debt to assets ratio has negative and statistically significant effect on profitability on total assets and profitability on sales. The finding of this paper concludes that less uses of debt increases the profitability of manufacturing firms in Nepal.

scholarly journals Working Capital Management on Profitability and Earning Assets of Insurance Industry in Egypt

2021 ◽  
Vol 16 (12) ◽  
pp. 17
Author(s):  
Salah Mohamed Eladly
Keyword(s):  
Probability Level ◽  
Capital Management ◽  
Working Capital ◽  
Current Ratio ◽  
Working Capital Management ◽  
Return On Equity ◽  
Independent Variables ◽  
Dependent Variables ◽  
Insurance Firms ◽  
Asset Quality

This paper is an attempt to investigate the effect of working capital management, measured by (Current Ratio, Quick Ratio and Liquidity)on dependent variables (Return on Assets, Return on Equity and Earning Assets (Asset Quality) of insurance firms in Egypt, the study sample is 49% from total insurance firms working of the insurance market in Egypt in 1999- 2019.A structural equation modelling was selected to construct of the model of this study, The evidences show that There is a positive significant effect on construct of the independent variables, current ratio (x1), quick ratio (x2), and liquidity (x3) on construct of the dependent variables in terms of Return on Equity (Y1), at a probability level less than (0.001). This validates the first hypothesis; the independent variables Current Ratio(x1), Quick Ratio(x2), and Liquidity(x3) have a significant effect on the dependent variables Return on Equity (Y1), There is a positive significant effect on the construct of the independent variables, Current Ratio (x1), Quick Ratio (x2), and Liquidity (x3) on the construct of the dependent variables in terms of Earning Assets (Asset Quality) (Y3), probability level less than (0.001). This validates of the third hypothesis; the independent variables in terms of Current Ratio (x1), Quick Ratio (x2), and Liquidity (x3) have a significant effect on (Earning Assets) Asset Quality (Y3).

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.

A Study On Comparison About Working Capital Management Of State Bank Of India And Industrial Credit And Investement Corporation Of India

Think India ◽  
2019 ◽  
Vol 22 (2) ◽  
pp. 251-276
Author(s):  
S. DEVI ◽  
R.POORNIMA RANI
Keyword(s):  
Main Theme ◽  
Managerial Accounting ◽  
Capital Management ◽  
Working Capital ◽  
Current Ratio ◽  
Efficient Operation ◽  
Working Capital Management ◽  
Satisfactory Level ◽  
Current Asset

Working capital management refers to a company's managerial accounting strategy designed to monitor and utilize the two components of working capital, current assets and current liabilities, to ensure the most financially efficient operation of the company. The goal of working capital management is to manage the firm’s current asset and current liabilities in such a way that satisfactory level of working capital is maintained. A study on comparison in working capital management with State Bank of India and Industrial Credit and Investment Corporation of India is analyzed to know the liquidity and current ratio. The interaction between current asset and current liabilities is therefore is the main theme of the theory of working capital management.

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.

Financial constraints and optimal working capital – evidence from an emerging market

2018 ◽  
Vol 14 (1) ◽  
pp. 37-53 ◽  
Author(s):  
Gaurav S. Chauhan ◽  
Pradip Banerjee
Keyword(s):  
Financial Constraints ◽  
Emerging Market ◽  
Manufacturing Firms ◽  
Capital Management ◽  
Working Capital ◽  
Partial Adjustment ◽  
Working Capital Management ◽  
Content Type ◽  
Cash Conversion Cycle ◽  
Systematic Feature

Purpose The purpose of this paper is to investigate the existence of an optimal or target level of working capital for the Indian manufacturing firms, and whether firms intensely follow the target or not. Design/methodology/approach The paper uses cash conversion cycle as a measure of net working capital and employs partial-adjustment dynamic panel models to test its target-following behavior. Findings The empirical results show that there is no evidence of systematic target-following behavior of working capital for the Indian manufacturing firms. The results hold true even after dividing the sample into four groups depending on the sign and magnitude of deviation. The results further show that lack of target-following tendency is not quite influenced by varying firm-specific characteristics and, therefore, seems to be a systematic feature across firms in India. Research limitations/implications Scarcity of such working capital management studies across emerging economies, facing several financial constraints, limits the comparison of findings. Future studies should be conducted to confirm the results. Practical implications The findings imply that even though an optimal working capital might exist, emerging market firms may not be able to actively pursue it on account of several financial constraints and managerial considerations. Originality/value The study contributes to the scant existing literature on the target-following behavior of working capital management in the Indian manufacturing firms, representing a typical emerging market facing several financial constraints.

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 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.

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