Exploring the Relationship between Working Capital Management, Profitability and Capital Structure

Objective - This paper explores the relationship between working capital management (WCM), profitability and capital structure. A preliminary framework provides an understanding of the role of WCM components with capital structure and profitability. Methodology/Technique - From the review of empirical studies it is confirmed that WCM is a main component in the financial aspects of the firms as even though WCM is targeted for the short-term decisions it has effect on the firm for the long-run. Findings - Companies need to use working capital policy and procedures in order to navigate performance. Emphasizing on WCM would lead to formal cost controls and performance together with firm's growth and productivity. The framework is set to help financial manager of the firms to balance the costs and benefits of debt and equity and reduce common obstacles on managing cash flows for long-term fixed investment. Novelty - The preliminary framework is original and unique that will contribute towards the enrichment of relevant literature. Practically, this study contributes to provide a better understanding of the managers and enable them to apply WCM strategies and make sure the firm is able to meet the stakeholder requirements. Type of Paper Review Keywords: Working Capital Management; Capital Structure; Profitability; JEL Classification: O16, M41.

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The Relationship between Working Capital Management and Cash Flows on the Financial Performance of Manufacturing Firms

Asian Journal of Research in Banking and Finance ◽

10.5958/2249-7323.2016.00030.4 ◽

2016 ◽

Vol 6 (6) ◽

pp. 34

Author(s):

Abdolkarim Moghadam ◽

Mehran Rahimi

Keyword(s):

Financial Performance ◽

Cash Flows ◽

Manufacturing Firms ◽

Capital Management ◽

Working Capital ◽

Working Capital Management ◽

The Relationship

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Analysis of Working Capital Efficiency in Cipla Ltd.

Adhyayan A Journal of Management Sciences ◽

10.21567/adhyayan.v4i1.10197 ◽

2014 ◽

Vol 4 (1) ◽

Author(s):

Dr. Shishir Pandey ◽

Dr. Avadhesh Kumar Verma ◽

Sunil Kumar

Keyword(s):

Cash Flows ◽

Cycle Period ◽

Capital Management ◽

Working Capital ◽

Short Term ◽

Operating Cycle ◽

Working Capital Management ◽

Management Efficiency ◽

Capital Efficiency ◽

The Relationship

Decisions relating to working capital involve managing relationships between a firm’s short-term assets and liabilities to ensure a firm is able to continue its operations, and have sufficient cash flows to satisfy both maturing short-term debts and upcoming operational expenses at minimal costs, increasing firm’s profitability. The working capital very much associate with the operating cycle. A perusal of the operating cycle good reveal that funds invested in the operation are recycled back in to cash. The shorter the period of operating cycle the larger will be the turnover of the funds invested in various purposes. The shorter period of operating cycle shows better efficiency of a firm. The efficiency of working capital management can be determined by the operating cycle of the firm. This paper aims at analyzing the efficiency of working capital management through the relationship between operating cycle period and profitability of Cipla Ltd. To measure the Working Capital Management Efficiency, Operating cycle has been calculated and the relationship is made with Gross Profit Ratio.

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A Study on Working capital Management in Hindustan Petroleum Corporation Limited

Asian Journal of Management ◽

10.52711/2321-5763.2021.00025 ◽

2021 ◽

pp. 164-168

Author(s):

Sruthi B ◽

Rashmi R

Keyword(s):

Annual Report ◽

Pearson Correlation ◽

Secondary Data ◽

Effective Management ◽

Capital Management ◽

Working Capital ◽

Short Term ◽

Working Capital Management ◽

The Past ◽

The Relationship

Working capital management is important for every organization as it refers to the effective management of current assets and current liabilities. The aim is to make sure that the firm is capable to continue its operations and it has sufficient cash flow to satisfy both maturing short-term debt and upcoming operational expenses. In this paper, an attempt has been made to study the management of working capital in Hindustan Petroleum Corporation Limited, a leading public sector enterprise in India over a period of 10 years (That is from 2009-10 to 2018-19). The paper also attempts to study the components of working capital and analyze the relationship between liquidity and profitability of HPCL. The study is based on secondary data collected from annual report of HPCL for the past 10 years, Pearson correlation and regression model are used for this purpose. From the study it is found that there is a significant relationship between liquidity and profitability.

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The Moderating Impact of Firm Size on the Relationship between Working Capital Management and Profitability

Prague Economic Papers ◽

10.18267/j.pep.681 ◽

2019 ◽

Vol 28 (3) ◽

pp. 296-312 ◽

Cited By ~ 2

Author(s):

Ilhan Dalci ◽

Cem Tanova ◽

Hasan Ozyapici ◽

Murad A. Bein

Keyword(s):

Firm Size ◽

Capital Management ◽

Working Capital ◽

Working Capital Management ◽

The Relationship

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Working Capital Management Practices

International Journal of Recent Technology and Engineering - 2 ◽

10.35940/ijrte.b1337.0882s819 ◽

2019 ◽

Vol 8 (2S8) ◽

pp. 156-161

Keyword(s):

Management Practices ◽

Secondary Data ◽

Project Work ◽

Capital Management ◽

Working Capital ◽

Short Term ◽

Good Opportunity ◽

Working Capital Management ◽

Money Flow ◽

The Relationship

VJ Engineers is one of the popular organizations in Chennai. Seeing the good opportunity to study financial systems and practices of VJ Engineers, it is relatively important to take up assignment on ‘WORKING CAPITAL MANAGEMENT IN VJ ENGINEERS’. During the project work, it is being analyzed the working capital position of this organization. [1],[ 3],[5] Decisions relating to working capital and short term financing are referred to as working capital management. These involve managing the relationship between a firm's short-term assets and its short-term liabilities. The goal of Working capital management is to ensure that the firm is able to continue its operations and that it has sufficient money flow to satisfy both maturing short-term debt and upcoming operational expenses.The study of working capital management is very helpful for the organisation to know its liquidity position. The study is relevant to the organization to know the day to day expenditure. This study is relevant to give an idea to utilise the current assets.This study is also relevant to the student as they can use it as a reference. This report will help in conducting further research. Other researcher can use this project as secondary data uncovering of PDA incorporation in effects on police reports.

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Manajemen Modal Kerja Dan Dampaknya Terhadap Nilai Perusahaan Dengan Corporate Governance Sebagai Variabel Pemoderasi

AKRUAL Jurnal Akuntansi ◽

10.26740/jaj.v6n1.p68-84 ◽

2014 ◽

Vol 6 (1) ◽

pp. 68

Author(s):

Adrianus Dhimas Setyanto ◽

Ika Permatasari

Keyword(s):

Corporate Governance ◽

Firm Value ◽

Stock Exchange ◽

Capital Management ◽

Working Capital ◽

Corporate Values ◽

Working Capital Management ◽

Enterprise Value ◽

Cash Conversion Cycle ◽

The Relationship

AbstractThis study aims to determine the effect of working capital management on firm value. Corporate governance is used as a moderating variable in this study to explore the role of corporate governance in the relationship between working capital management with corporate values. Program participants of Corporate Governance Perception Index (CGPI) are used as a sample during the period from 2003 to 2011 and listed on the Indonesian Stock Exchange (IDX). We were using simple linear regression and the testing of moderating effects were calculated by Moderated Regression Analysis (MRA). The results showed that the working capital management has an influence on the value of the firm. However, corporate governance variables failed to moderate the relationship between working capital management and enterprise value. It shows that companies and investors in the market still lack concern for the program response and Corporate Governance Perception Index (CGPI) as an assessment of the application of the principles of corporate governance that has been done by the company .Keywords: Working Capital Management, Cash Conversion Cycle, Corporate Governance, Firm Values

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Impact of Loan Accessibility on Working Capital Management and Profitability: Comparative Study of Family Versus Non-Family Firms

Global Social Sciences Review ◽

10.31703/gssr.2020(v-i).23 ◽

2020 ◽

Vol V (I) ◽

pp. 220-230

Author(s):

Kanwal Iqbal Khan ◽

Adeel Nasir ◽

Aniqa Arslan

Keyword(s):

Comparative Analysis ◽

Family Firms ◽

Investment Decisions ◽

Sustainable Growth ◽

Capital Management ◽

Working Capital ◽

Financial Cost ◽

Working Capital Management ◽

Capital Rationing ◽

The Relationship

This study is conducted to identify the direction of the relationship between working capital management (WCM) and firm performance of the non-financial sector of Pakistan from 2009 till 2018. This has also looked at the effect of restricted access to loan on the WCM- Profitability relationship. The findings confirmed that restricted loan accessibility impacts the WCM-Profitability relationship. The comparative analysis demonstrated that financially constrained firms are mostly non-family firms that are new, growing, smaller in size, face high risk, maintain high liquidity and tangibility ratios than non-constrained firms. Further, the working capital levels of financially constraint firms is lower because of high operating expenses and greater capital rationing. Managers and scholars may use these findings for the administration of their working capital policies in order to avoid the financial cost and create more opportunities for financial accessibility which is further beneficial for making informed investment decisions, yielding higher profits that contribute towards sustainable growth.

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