EFFECT OF WORKING CAPITAL MANAGEMENT AND LEVERAGE ON COMPANY VALUE WITH PROFITABILITY AS MODERATING VARIABLES

This study aims to determine how the influence of working capital management and leverage on firm value with profitability as a moderating variable. The research method used is quantitative data method. 1) Working Capital Management variable has a positive and significant effect on Firm Value. 2) Leverage variable has no significant effect on firm value. 3) Working Capital Management and Leverage variables have no simultaneous significant effect on Firm Value. 4)Profitability variable is a moderator variable that affects the relationship between Working Capital Management and Firm Value. 5) Profitability variable is not a moderator variable that can moderate the relationship between Leverage and Firm Value.Company value can be used as the basis for making investment decisions because this aspect measures the ability of the company's assets to generate a return on investment made in the company's asset instruments.

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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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Association between the availability of financial resources and working capital management with stock surplus returns in Iran

International Journal of Emerging Markets ◽

10.1108/ijoem-11-2017-0439 ◽

2019 ◽

Vol 14 (2) ◽

pp. 343-361 ◽

Cited By ~ 4

Author(s):

Mahdi Salehi ◽

Nadia Mahdavi ◽

Saeed Zarif Agahi Dari ◽

Hossein Tarighi

Keyword(s):

Stock Returns ◽

Firm Value ◽

Financial Constraints ◽

Cash Holdings ◽

Financial Resources ◽

Capital Management ◽

Working Capital ◽

Working Capital Management ◽

Content Type ◽

The Relationship

Purpose The purpose of this paper is to investigate the relationship between access to financial resources, working capital with surplus stock returns and value of the company in Iran. Design/methodology/approach The study population consists of 728 observations and 91 firms listed on the Tehran stock exchange during an eight-year period between 2009 and 2016. The statistical model used in this study is a multivariate regression model; further, the statistical technique used to test the hypotheses is panel data. Findings The results saw a negative and significant linkage between changes in cash and stock’ excess returns, whereas no meaningful association between changes in working capital and stock surplus returns was seen. In other words, an Iranian rial (Iran’s currency) invested in working capital worth less on average than a rial held in cash. Furthermore, the authors realized that in an inflationary economy, firms mainly pay more dividends so as to illustrate better their financial position and also to attract more investors’ trust. The results also indicated that the final value of working capital in the companies that are faced with financial constraints is more than companies that are not faced with financial constraints. Subsequently, after the elimination of the effects of inflation on stock returns, it was found there is not any significant association between the stock’s real return and firm value. Practical implications This is one of the most comprehensive research works in Iran that simultaneously surveys the impacts of access to finance and working capital on firm value. This research warns corporate managers to pay more attention to the importance of keeping cash to finance and manage working capital for profitability and sustainability of their company’s operations. Surely, by understanding the relationship between cash holdings, working capital management and stock surplus return, investors will be able to make appropriate decisions about the optimal choice of funds. Originality/value What really will fascinate other scholars about this paper is the time period of the study because there were unprecedented sanctions against Iran market and many manufacturing industries were in financial strain. Without hesitation, the paper will make aware investors and stakeholders of this fact that cash holdings will be a good way in reducing the corporate financial problems in emerging markets, particularly those markets face financial sanctions like Iran.

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Working capital management, firm performance and nature of business

International Journal of Productivity and Performance Management ◽

10.1108/ijppm-10-2019-0468 ◽

2020 ◽

Vol 70 (1) ◽

pp. 179-200

Author(s):

Kumar Sanjay Sawarni ◽

Sivasankaran Narayanasamy ◽

Kanagaraj Ayyalusamy

Keyword(s):

Firm Performance ◽

Firm Value ◽

Regression Models ◽

Age And Growth ◽

Capital Management ◽

Working Capital ◽

Working Capital Management ◽

Content Type ◽

The Impact ◽

The Relationship

PurposeThis paper aims to investigate the impact of the efficiency of working capital management (WCM) on the performance of a sample of Indian companies and explore how the nature of the firm's business influences the significance and direction of this impact.Design/methodology/approachThe data for this study were collected for the period of 2012–2018 for 414 non-financial firms listed on the Bombay Stock exchange. Fixed-effect regression models were run by taking Tobin's Q and return on equity (ROE) as dependent variables, and net trade cycle (NTC) and its components as explanatory variables in the presence of liquidity, leverage, size, age and growth as control variables. Sample firms were segregated into manufacturing, trading and service groups, and regression models were used for all the groups to understand the effect of the nature of a firm's business.FindingsWCM efficiency has a significant impact on the performance of the sample firms. Non-financial Indian firms deliver better financial performance by maintaining lower NTC. Like NTC, its components also impact firm value and profitability. The results report that the significance of the relationship varies depending upon the nature of the firm's business.Originality/valueThe previous research studies had not used a sample of large number of Indian firms. Unlike previous studies, this study reports the influence of the nature of business on the relationship between WCM and firm performance. Further, this paper also examines how the individual components of working capital influence the performance of Indian firms.

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Apakah Profitabilitas Memediasi Pengaruh Manajemen Modal Kerja terhadap Nilai Perusahaan?

AFRE (Accounting and Financial Review) ◽

10.26905/afr.v3i2.5452 ◽

2021 ◽

Vol 3 (2) ◽

pp. 103-114

Author(s):

Evan Yulandreano ◽

Apriani Dorkas Rambu Atahau ◽

Imanuel Madea Sakti

Keyword(s):

Firm Value ◽

Positive Impact ◽

Stock Exchange ◽

Capital Management ◽

Working Capital ◽

Return On Assets ◽

Working Capital Management ◽

Cash Conversion Cycle ◽

Company Value ◽

Panel Data Regression

This study aims to examine the effect of working capital management on firm value with profitability as a mediating variable. This study uses a sample of 18 retail companies listed on the Indonesia Stock Exchange from 2014 to 2018. Working capital management is measured by Cash Conversion Cycle (CCC), profitability is measured by Return on Assets (ROA), and company value is measured by Tobins Q. Panel data regression is conducted to test the direct effect, followed by the Sobel test to test for the indirect effect. The results showed that working capital management increased firm value directly and indirectly through profitability. Working capital management with a shorter cycle results in greater profitability, thus driving firm value. The implication of this research is that retail companies are expected to shorten the company's cash cycle so that it has a positive impact on the company's profitability and value. DOI: https://doi.org/10.26905/afr.v3i2.5452

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An Empirical Study on the Relationship Between Working Capital Management Efficiency and Firm Value of Chinese Manufacturing Listed Companies—Differences Between State-Controlled and Non-State-Controlled Companies

Proceedings of the 5th International Conference on Social Sciences and Economic Development (ICSSED 2020) ◽

10.2991/assehr.k.200331.050 ◽

2020 ◽

Author(s):

Caihua Ma ◽

Chenying Yao

Keyword(s):

Empirical Study ◽

Firm Value ◽

Listed Companies ◽

Capital Management ◽

Working Capital ◽

Working Capital Management ◽

Management Efficiency ◽

The Relationship

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Efficiency of Working Capital Management and Firm Value: Evidence From Chinese Listed Firms

International Journal of Financial Research ◽

10.5430/ijfr.v10n6p133 ◽

2019 ◽

Vol 10 (6) ◽

pp. 133

Author(s):

Ratnam Vijayakumaran

Keyword(s):

Financial Management ◽

Firm Value ◽

Capital Management ◽

Working Capital ◽

Working Capital Management ◽

Trade Cycle ◽

Accounts Receivable ◽

Listed Firms ◽

Chinese Listed Companies ◽

The Relationship

This paper examines the relationship between the efficiency of working capital management (WCM) and the firm value, focusing on a large panel of Chinese listed companies. WCM which involves a trade-off between profitability and risk is a very important element of the financial management of the firm. The net trade cycle (NTC) and its components are used to measure efficiency of WCM, while the firm value is measured by the Tobin’s Q ratio. The study makes use of the panel data methodology to estimate the regression models. This study reports that the net trade cycle is negatively associated with firm value. More specially, the study finds that firm value is adversely affected by the number of days accounts receivable and inventories, indicating that working capital provides a real opportunity for financial executives to release cash and improve firms’ value. The findings of this study are consistent with the idea that managers can enhance firm value by efficiently managing the investment in working capital.

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Mediasi Profitabilitas dalam Menilai Hubungan antara Manajemen Modal Kerja dan Nilai Perusahaan

AFRE (Accounting and Financial Review) ◽

10.26905/afr.v3i2.5807 ◽

2021 ◽

Vol 3 (2) ◽

pp. 126-135

Author(s):

Mohammad Arief

Keyword(s):

Financial Performance ◽

Firm Value ◽

Sampling Method ◽

Stock Exchange ◽

Partial Least Square ◽

Least Square ◽

Capital Management ◽

Working Capital ◽

Working Capital Management ◽

Company Value

This study aims to examine the effect of working capital management on firm value in cement companies listed on the Indonesia Stock Exchange (IDX) in the 2012-2017 period, either directly or indirectly through profitability. This study uses a quantitative approach. Sampling using the saturated sampling method. There are six cement companies that meet the categories as samples. Furthermore, Partial Least Square (PLS) is used for analysis and hypothesis testing for testing the profitability variable as a mediation. The results show that working capital that is managed effectively and efficiently can improve financial performance so as to increase firm value. The results of the mediation test show that profitability positively mediates the effect of working capital management on firm value. This explains that the implementation of good working capital management can increase the profit generated by the company so that the company value increases, which ultimately investors respond positively.DOI: https://doi.org/10.26905/afr.v3i2.5807

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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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