The effects of working capital management on company profitability: Evidence from Sri Lankan listed companies

2020 ◽  
Vol 10 (8) ◽  
pp. 5
Author(s):  
Ravivathani Thuraisingam
Keyword(s):  
Listed Companies ◽  
Sri Lankan ◽  
Capital Management ◽  
Working Capital ◽  
Working Capital Management

scholarly journals The Impact of Corporate Governance on Working Capital Management Efficiency: Evidence from the Listed Companies in the Consumer Services Sector in Botswana

2018 ◽  
Vol 10 (12) ◽  
pp. 135
Author(s):  
Sathyamoorthi C. R. ◽  
Christian J. Mbekomize ◽  
Mogotsinyana Mapharing ◽  
Popo Selinkie
Keyword(s):  
Corporate Governance ◽  
Listed Companies ◽  
Capital Management ◽  
Working Capital ◽  
Governance Mechanisms ◽  
Working Capital Management ◽  
Management Efficiency ◽  
Corporate Governance Mechanisms ◽  
The Impact ◽  
Moderate Relationship

The paper presents the findings of the analysis of the impact of corporate governance mechanisms on working capital management efficiency in the listed companies of the Consumer service sector in Botswana. Eight corporate governance elements and seven working capital components were extracted from the annual reports of a sample of six companies for the period 2012 to 2017 for the analysis. Thirty six observations were obtained. Pearson correlations were executed to determine the relationship between corporate governance elements and working capital components. OLS regression analysis was performed to establish the explaining power of the combination of corporate governance elements on each of the working capital components. The correlation analysis shows that number of non-executive directors has a significant negative but moderate relationship with cash conversion cycle and number of board subcommittees has significant positive but moderate relationship with Debt ratio. The regression results suggest that corporate governance mechanisms have a significant impact on working capital management, the highest impact being reflected on inventory conversion period. The implications of these findings are that boards of directors have a significant role to play in working capital management efficiency of the companies they govern. They should therefore continue providing attainable policies on working capital management and remain vigilant on demanding feedback on their implementations.

The Effect of Working Capital Management on Firm's Profitability

2016 ◽  
pp. 244-261
Author(s):  
Seda Erdogan
Keyword(s):  
Regression Analysis ◽  
Direct Effect ◽  
Optimal Strategy ◽  
Listed Companies ◽  
Panel Regression ◽  
Capital Management ◽  
Working Capital ◽  
Working Capital Management ◽  
Trade Off ◽  
Cash Conversion Cycle

Working capital management is an extremely essential issue for the healthy conduct of the sustainability of a business. The active and day-to-day nature of the short term business emporium, the ongoing necessity to substitute current assets and in the meantime to liquidate current liabilities clearly demonstrates the significance of working capital management and therefore the essential duty the financial executives carry. While an optimal strategy of working capital management is expected to positively contribute not only to the profitability of a firm but also its value; there is a trade-off between the liquidity level the firm is carrying and its profitability. The direct effect of working capital management on profitability and liquidity of firms clearly demonstrates the significance working capital management has in a firm and consequently the objective of this chapter is to find whether or not working capital management, i.e. cash conversion cycle has an effect on profitability for the publicly listed companies in Turkey using panel regression analysis.

scholarly journals Impact of Working Capital Management on Firm’s Profitability: A Study on Listed Companies in Sri Lanka

2020 ◽  
pp. 42-58
Author(s):  
Vianny Jeniston Delima
Keyword(s):  
Regression Analysis ◽  
Sri Lanka ◽  
Correlation Analysis ◽  
Listed Companies ◽  
Descriptive Statistics ◽  
Capital Management ◽  
Working Capital ◽  
Working Capital Management ◽  
Cash Conversion Cycle ◽  
Capital Financing

Aims: The main aim of the study is to identify whether working capital management has an impact on firm’s profitability of listed companies in Sri Lanka. Place and Duration of Study: Pooled panel data of 95 listed companies from 18 sectors are listed on the Colombo Stock Exchange (CSE) which comprised of 475 observations is used during the period of 2012/2013 to 2016/2017. Methodology: Descriptive statistics, Pearson’s Correlation analysis, ANOVA, and Pooled Regression analysis were employed as measures of analysis. Working capital management components and working capital policies are used as independent variables which comprised of number of days of account receivable (DAR), number of days of inventories (DI), number of days of account payables (DAP), cash conversion cycle (CCC), working capital investment policies (WCIP), and working capital financing policies (WCFP). Current ratio (CR), firm size (SIZE), sales growth (GROWTH), and Debt ratio (DR) were employed as controlled variables. Gross operating profit (GOP) and Return on assets (ROA) were used as dependent variable. Results: In the descriptive statistics, average of DAR, DI, DAP, and CCC are 64, 63, 97, and 29 days respectively. The average WCIP and WCFP are indicated as 40% and 27% of total assets. For control variables, the average CR, SIZE, GROWTH, and DR are indicated as 2.27, 14.50, 33% and 40%. In the Pearson correlation analysis, CCC has negative relationship with GOP and ROA. With regard to WCIP and WCFP, there are negative significant relationships with GOP and ROA. Regression analysis states that working capital management significantly impacts on firm’s profitability of listed companies in Sri Lanka. Conclusion: These findings would be useful to consider on maintaining optimal working capital management components and policies to avoid corporate collapse and to maximize firm’s profitability.

scholarly journals WORKING CAPITAL MANAGEMENT AMONG LISTED COMPANIES OF PAKISTAN

2017 ◽  
Vol 5 (2) ◽  
pp. 80-91
Author(s):  
Waqar Ul-Hassan ◽  
Mohsin Zubair ◽  
Zeeshan Hasnain ◽  
Shahbaz Hussain
Keyword(s):  
Stock Exchange ◽  
Pearson Correlation ◽  
Sample Selection ◽  
Selection Criterion ◽  
Listed Companies ◽  
Capital Management ◽  
Working Capital ◽  
Working Capital Management ◽  
Operating Income ◽  
Cash Conversion Cycle

The study aims to investigate the strength of working capital management for measuring the financial performance of listed stocks. The study incorporates descriptive statistics, Pearson correlation, and multiple regression models for interpretation and execution of data. Five years (2006-11) panel data of 125 listed companies of Pakistan stock exchange (PSX) is selected in accordance to sample selection criterion. Results of regression analysis supported an inverse relationship between firm`s profitability and working capital management. Return on asset and Gross operation income are taken as indicators of profitability. Inventory turnover in days, Average age of A/R, Average payable period and Cash conversion cycle are considered as independent variables to measure firm’s profitability. Firm size, Sales growth, and financial debt ratio are favored as control variables. Overall Return on asset models indicated poor values of R-square`s and Gross operating income models showed robustness.

scholarly journals Working Capital Management and Corporate Performance: Evidence from Sri Lankan Listed Manufacturing Firms

2018 ◽  
Vol 7 (2) ◽  
pp. 577 ◽  
Author(s):  
Ratnam Vijayakumaran ◽  
Sunitha Vijayakumaran
Keyword(s):  
Stock Exchange ◽  
Optimal Level ◽  
Sri Lankan ◽  
Firm Characteristics ◽  
Manufacturing Companies ◽  
Capital Management ◽  
Working Capital ◽  
Working Capital Management ◽  
Firm Profitability ◽  
Performance Effects

Working capital that represents a significant portion of a firm’s total assets affects its profitability and liquidity. This study examines the performance effects of working capital management using a panel of listed manufacturing companies on the Colombo Stock Exchange (CSE) over the period 2011 to 2016. Controlling for unobservable firm specific heterogeneity and a set of observable firm characteristics, we document that working capital is non-linearly (inverted U-shaped) related to firm profitability. This indicates the existence of an optimal level of working capital that balances the costs and benefits of maintaining working capital, and maximizes firm’s performance.

scholarly journals The Relationship between Working Capital Management, Financial Constraints and Performance of Listed Companies in Tehran Stock Exchange

2017 ◽  
Vol 10 (2) ◽  
pp. 248 ◽  
Author(s):  
Ali Kowsari ◽  
Mohammad Reza Shorvarzi
Keyword(s):  
Financial Constraints ◽  
Negative Impact ◽  
Stock Exchange ◽  
Listed Companies ◽  
Capital Management ◽  
Working Capital ◽  
Cross Sectional ◽  
Working Capital Management ◽  
And Performance ◽  
The Relationship

The main objective of this study was to investigate the relationship between working capital management, financial constraints and performance of listed companies in Tehran Stock Exchange. To verify this financial information from 148companies listed on the Tehran Stock Exchange during the period 2009- 2013 were studied. Information required extracted from Rah Avard Novin 3 software, and thensummarized, classified, and calculated by Microsoft Excel, and finally through Eviews 8 and Stata 12 software were analyzed. According to the statistical procedures conducted in 95/0 reliability, the assumptions are tested. methods of the study are inductive reasoning and in terms of time are cross-sectional and in terms of relationship between variables is correlation. the results showed that ROA has a negative impact on working capital management. While financial constraints affect the relationship between working capital management and return on assets. better management of working capital can improve companies’ performance. On the other hand, effect of working capital on companies’ performance would be increased when facing financial constraint.

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