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1 – 10 of over 5000
Open Access
Article
Publication date: 25 August 2020

Amer Morshed

The study aims to explain the relationship between accounting and finance through measuring the effect of rational working capital management on profitability.

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Abstract

Purpose

The study aims to explain the relationship between accounting and finance through measuring the effect of rational working capital management on profitability.

Design/methodology/approach

Employing the methodology of semi-structured interviews with sixteen financial managers.

Findings

The findings pointed out the relationship between accounting and finance is complementary, since it supports the accountant by the critical skills and information, like project evaluation, managing the company funding resources and working capital management. These skills put the accountant up to the financial manager stage. The working capital investment and financing policies have the most significant impact on profitability. These policies related to risk and return theory; since the conservative policy will reduce both the risk and return and the aggressive one will have the opposite impact.

Originality/value

It recommends accountants to be in professional stage and increase the profitability of the company to grab both accounting and finance information and skills.

Details

Asian Journal of Accounting Research, vol. 5 no. 2
Type: Research Article
ISSN: 2443-4175

Keywords

Open Access
Article
Publication date: 26 October 2020

Osama EL-Ansary and Heba Al-Gazzar

This paper aims to investigate the possible non-linear effect of net working capital (NWC) level on profitability for Middle East and North Africa (MENA) region listed companies…

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Abstract

Purpose

This paper aims to investigate the possible non-linear effect of net working capital (NWC) level on profitability for Middle East and North Africa (MENA) region listed companies. Furthermore, the study tests the possible interactive effect of cash levels on the relationship between NWC and profitability.

Design/methodology/approach

NWC level is the independent variable and profitability is the dependent variable using two proxies, return on assets (ROA) and returns on equity (ROE). Control variables are size, leverage, gross domestic product growth and sales revenue growth. The generalized method of moments was used to analyze the data of 134 consumer-goods listed firms in 12 MENA countries for the period 2013–2019.

Findings

The results demonstrate that NWC levels had a non-linear effect on profitability using ROA as a profitability proxy while results were insignificant using ROE as a profitability proxy. Furthermore, results show the absence of interactive effects between NWC, cash levels and both profitability proxies.

Originality/value

The study fills a gap in the working capital management (WCM) literature by providing new evidence on WCM’s non-linear effect of corporate performance in the MENA region emerging markets using the consumer-goods industry sample. The study contributes to the financial managers’ working capital optimization efforts in the MENA region by providing evidence on the usefulness of WC optimization efforts in the region from a financial performance point of view. According to the researchers’ knowledge, a few studies attempted to investigate this non-linear relationship for neither MENA region countries nor the consumer-goods industry.

Details

Journal of Humanities and Applied Social Sciences, vol. 3 no. 4
Type: Research Article
ISSN:

Keywords

Open Access
Article
Publication date: 3 November 2023

Rajesh Desai and Bhoomi Mehta

The present study examines the initial working capital policy (WCP) and its evolution for newly established manufacturing firms.

Abstract

Purpose

The present study examines the initial working capital policy (WCP) and its evolution for newly established manufacturing firms.

Design/methodology/approach

Using panel data of 162 firms over a period of 10 years, the study analyses the persistence-cum-convergence in WCP over the subsequent years through descriptive analysis and difference of means test. Further, the prevalence of ß – convergence, and σ-convergence has been examined using standard least squares regression, dynamic panel analysis and the Wald test.

Findings

The results indicate that sample firms continue to follow the initial WCP in the subsequent years with a gradual convergence in the WCP. Alternatively, the firms with aggressive (conservative) WCP at the time of incorporation will continue following it. Further, the firms with aggressive initial WCP have witnessed higher growth than those with conservative initial WCP.

Research limitations/implications

Findings will assist managers and practitioners to understand the dynamics of WCP over the life cycle of the firm and select appropriate WCP as certain policies lead to certain growth paths.

Originality/value

Though working capital management has been recognized as a critical managerial decision, limited research is available on its evolution, especially for newly established manufacturing companies in an emerging economy. Current research attempts to fill this gap and provide valuable insights for the effective management of liquidity.

Details

Asian Journal of Accounting Research, vol. 9 no. 1
Type: Research Article
ISSN: 2459-9700

Keywords

Open Access
Article
Publication date: 29 February 2024

Frank Nana Kweku Otoo

Optimal application and commitment toward financial management practices enhance organization performance. This study aims to assess the influence of financial management

Abstract

Purpose

Optimal application and commitment toward financial management practices enhance organization performance. This study aims to assess the influence of financial management practices on organizational performance of small- and medium-scale enterprises.

Design/methodology/approach

Data were collected from 45 small-sized and 72 medium-sized firms. Data supported the hypothesized relationships. Construct reliability and validity were established through confirmatory factor analysis. The conceptual model and hypotheses were evaluated by using structural equation modeling.

Findings

The results indicate that working capital significantly influenced organizational performance. Capital budget management significantly influenced organizational performance. A non-significant influence of asset management on organizational performance was observed.

Research limitations/implications

The generalizability of the findings will be constrained due to the research’s SMEs focus and cross-sectional data.

Practical implications

The study’s findings will serve as valuable pointers for stakeholders and decision-makers of SMEs in the development of well-articulated and proactive financial management systems to ensure competitiveness, sustainability, viability and financial competences.

Originality/value

The study adds to the corpus of literature by evidencing empirically that financial management practices significantly influenced SMEs’ performance.

Details

Vilakshan - XIMB Journal of Management, vol. ahead-of-print no. ahead-of-print
Type: Research Article
ISSN: 0973-1954

Keywords

Open Access
Article
Publication date: 8 March 2022

Maad A. Q. Aldubhani, Jitian Wang, Tingting Gong and Ramzi Ali Maudhah

This study aimed to find out whether working capital management policies affect the profitability of manufacturing companies listed on the Qatar Stock Exchange.

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Abstract

Purpose

This study aimed to find out whether working capital management policies affect the profitability of manufacturing companies listed on the Qatar Stock Exchange.

Design/methodology/approach

To assess the working capital management and profitability relationship, the authors applied a multiple regression analysis methodology in all manufacturing companies listed on the Qatar Stock Exchange (ten firms) between 2015 and 2019. Average collection period, inventory turnover, average payment period and cash conversion cycle were adopted as proxies for working capital management, and profitability was measured by operating profit margin (OPM), return on assets (ROA), return on capital employed (ROCE) and return on equity (ROE).

Findings

The study found that companies with shorter receivables collection periods and cash conversion cycles are more profitable. Longer inventory turnover periods and accounts payable payment periods are related to higher profitability of the firms.

Originality/value

Previous studies have assessed the relationship between working capital management and profitability. However, this study is the first one to use these four variables combined (OPM, ROA, ROCE and ROE) to measure profitability; this is what was limited in previous studies. In comparison, the previous studies were not comprehensive in studying the impact of working capital management on profitability from all aspects of profitability's variables [operational (OPM), economic (ROA), capitalist (ROCE) and financial (ROE)]. However, this study focused on all these aspects to make the results of the study more accurate. Also, it is worth mentioning that this study is the first research performed on Qatar Stock Exchange, although Qatar has achieved remarkable progress in the industrial sector in recent years, making it one of the first industrialized countries in the Middle East.

Details

Journal of Money and Business, vol. 2 no. 1
Type: Research Article
ISSN: 2634-2596

Keywords

Open Access
Article
Publication date: 2 November 2023

Margaret Fitzsimons, Teresa Hogan and Michael Thomas Hayden

Bootstrapping is a practitioner-based term adopted in entrepreneurship to describe the techniques employed in micro, small and medium-sized enterprises (MSMEs) to minimise the…

Abstract

Purpose

Bootstrapping is a practitioner-based term adopted in entrepreneurship to describe the techniques employed in micro, small and medium-sized enterprises (MSMEs) to minimise the need for external funding by securing resources at little or no cost and applying strategies to effectively use resources. Working capital management (WCM) is a term used in financial management to define a set of practices used to manage business resources, including cash management. This paper explores the overlap and divergence between these two disciplinary distinct concepts.

Design/methodology/approach

A dual methodology is employed. First, the usage of the two terms in prior literature is analysed and synthesised. Second, the study uses factor analysis to explore how bootstrapping practices described by owners of 167 established MSMEs relate to the components of WCM in financial management.

Findings

The factor analysis identifies two main bootstrapping practices employed by MSMEs: (1) delaying payments and owner-related bootstrapping and (2) customer-related bootstrapping. Delaying payments is an integral practice in trade payables management and customer-related bootstrapping includes practices that are integral to trade receivables management. Therefore, links between bootstrapping practices and WCM practices are firmly established.

Research limitations/implications

The study is not without limitations. Based on cross-sectional evidence for established firms in Ireland only, future studies could explore cross-country longitudinal panel data to fully examine life cycle and sectoral effects, as well as other external shocks (for example, COVID-19) on bootstrapping and WCM practices. This study does not explain why some factors (for example, joint utilisation and inventory management) are present in some bootstrapping studies and not in others; further case study research might help explain this. Finally, changes in the business environment facing start-ups and established enterprise, including increased digitalisation, online trading, self-employment, remote hub working and sustainability, offer new avenues for bootstrapping research.

Originality/value

This is the first study to comprehensively explore the conceptual and empirical links between bootstrapping and WCM. This study will enable researchers and practitioners in these two distinct disciplines to learn from each other. Accounting researchers and practitioners can broaden their understanding of how WCM “works” in MSME settings. Similarly, entrepreneurship researchers and practitioners can deepen their understanding of how bootstrapping can be adopted by businesses to manage resources effectively.

Details

Journal of Applied Accounting Research, vol. ahead-of-print no. ahead-of-print
Type: Research Article
ISSN: 0967-5426

Keywords

Open Access
Article
Publication date: 15 July 2021

Ali Saleh Ahmed Alarussi

This paper examines the financial ratios that may have a significant effect on the efficiency in Malaysian listed companies. Nine financial ratios measure seven variables which…

12057

Abstract

Purpose

This paper examines the financial ratios that may have a significant effect on the efficiency in Malaysian listed companies. Nine financial ratios measure seven variables which are firm visibility, tangibility, working capital, leverage, liquidity, productivity and profitability.

Design/methodology/approach

Data are collected from 108 public listed companies in Malaysia. The data extracted from companies' annual reports for three years 2012–2014. STATA software analysis is used to examine these relationships.

Findings

The results show each of tangibility and liquidity have negative relationships with efficiency ratio. In against of that, profitability, working capital and productively positively link to efficiency. Leverage which is measured by two ratios – Debt ratio and Debt equity ratio – shows mix results. Debt ratio shows a positive but not significant relationship with efficiency ratio and Debt equity ratio shows a negative significant relationship with efficiency ratio.

Practical implications

The results benefit companies, investors, economists and governments regulators in Malaysia-to understand the efficiency determinants, so help to make the right decision to enhance the efficiency level in companies which leads to enhance the amount of investments which in turn, enhance the country's economy in general.

Originality/value

This study differs than previous studies number of aspects: first the study covers a three years' period between 2012 and 2014, this period presents the movement of Malaysian current into depreciation with more than 45 percent of its value. Second, in the Malaysia context, this study examines new variables such as firm visibility, tangibility, and productivity. Third, the results of this study will help managers, shareholders, investors, regulators and other parties to make right decisions that will enhance the level of firm efficiency which enhances the investments and the economy of Malaysia.

Details

Asian Journal of Economics and Banking, vol. 5 no. 2
Type: Research Article
ISSN: 2615-9821

Keywords

Open Access
Article
Publication date: 2 May 2023

Rejaul Karim, Md. Abdullah Al Mamun and Abu Sadeque Md. Kamruzzaman

The purpose of the present study is to determine how the cash conversion cycle (CCC) affects the financial performance of manufacturing companies in Bangladesh.

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Abstract

Purpose

The purpose of the present study is to determine how the cash conversion cycle (CCC) affects the financial performance of manufacturing companies in Bangladesh.

Design/methodology/approach

The authors have collected data of 61 Dhaka Stock Exchange (DSE)-listed firms from the 10 distinct manufacturing industries of Bangladesh for 18 years, from 2003 to 2020. The data have been analyzed through the two-steps system generalized method of moment (GMM) regression model, using profitability indicators return on asset (ROA) and earnings per share (EPS) as dependent variables, while CCC has been used as the independent variable, whereas asset turnover (ATO) and financial leverage (LEV) were used as control variables to assess the relationship between the CCC and financial performance.

Findings

The findings indicated that CCC has a negative connection with profitability – ROA and EPS, with the connection between CCC and EPS being highly significant. This indicates that reducing the inventory conversion time, reducing the period of receivable collection and making payments to creditors with potential delays might help Bangladeshi manufacturing firms boost their profitability. In addition, the firm-specific characteristics, namely ATO and LEV significantly affect the firm's profitability.

Research limitations/implications

The research was based only on secondary sources and information was scarce. This research was conducted to determine the impact of the CCC on the corporate profitability of the manufacturing sector solely. There might be many other working capital variables that are still unexplored through this study.

Practical implications

The current study's findings are consistent with the traditional rule that minimizing the firm's days of the cash cycle may optimize financial performance. The results of this research have added to the existing body of knowledge on the topic of working capital management (WCM). Future research endeavors can be initiated for assessing the impact of the CCC on the firm's profitability in other industrial sectors or to identify other working capital variables that have much impact on corporate profitability.

Originality/value

This study is an original work of the researchers and adds value to the current literature in the domain of WCM and corporate profitability. The present study is the first one that covers firms in all the manufacturing industries in Bangladesh. The corporate managers, creditors, investors and other concerned stakeholders will be benefited from the findings of the present study.

Details

Asian Journal of Economics and Banking, vol. 8 no. 1
Type: Research Article
ISSN: 2615-9821

Keywords

Open Access
Article
Publication date: 30 April 2018

Oh Kyoung Kwon, Ha-Neul Han and Hye-Min Chung

Previous approaches have employed the SCOR model for evaluating supply chain management, and in particular, have focused on cash-to-cash cycle time (C2C). This paper reviews the…

Abstract

Previous approaches have employed the SCOR model for evaluating supply chain management, and in particular, have focused on cash-to-cash cycle time (C2C). This paper reviews the Supply Chain Index (SCI) developed by Supply Chain Insight LLC, which evaluates supply chain performance based on balance, strength, and resiliency. The main aim of this study is to review SCI as a new methodology to measure performance management, as well as to apply C2C for a case study of Korean firms, to compare and present differences for further complementary application.

Details

Journal of International Logistics and Trade, vol. 16 no. 1
Type: Research Article
ISSN: 1738-2122

Keywords

Open Access
Article
Publication date: 7 April 2020

Muhammad Naeem Shahid, Aamir Abbas, Khalid Latif, Ayesha Attique and Safwan Khalid

This study aims to identify the impact of corporate governance on performance of sugar mills. In order to study this relation, a model is constructed in which ownership structure…

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Abstract

Purpose

This study aims to identify the impact of corporate governance on performance of sugar mills. In order to study this relation, a model is constructed in which ownership structure and independent directors are taken as independent variables. Whereas firm performance is analyzed by using proxy variables such as return on asset (ROA), return on equity (ROE) and sales growth. Moreover, size of board, working capital management (WCM) and philanthropy are taken as mediating variables between governance variables and firm performance.

Design/methodology/approach

The data of 32 sugar mills listed at Pakistan Stock Exchange for the period of four years (i.e. 2014–2017) is used for this research. Moreover, to investigate the model, generalized least squares statistical method is used to measure the relationship between variables.

Findings

The results revealed that there is significant but positive relationship between independent directors and ROA while ownership structure and ROE have significant but negative relationship. Thus, the board of directors should make it sure that all stakeholders and organizations should increase the nonfamily ownership in firms for better corporate performance. Moreover, philanthropy and WCM mediate the relationship between corporate governance and firms' performance.

Practical/implications

This research work will be helpful in the corporate governance, and further researchers can conduct their study by considering executive/nonexecutive director and institutional owners as governance variables.

Originality/value

This paper fulfills an identified need to study how Corporate Governance effect the performance of firm.

Details

Journal of Asian Business and Economic Studies, vol. 27 no. 2
Type: Research Article
ISSN: 2515-964X

Keywords

1 – 10 of over 5000