A Weighted Cash Conversion Cycle

Financial Management Practices

“…Further, they are conscious of risk inherent in such sales. These fi ndings are in tune with the fi ndings of Gentry et al ( 1990 ) and Opler et al ( 1999 ) (Table 5.18 ). Similarly, there is a practice of preparing 'ageing schedule of debtors' amongst all the sample companies (Table 5.17 ).…”

“…Richards and Laughlin ( 1980 ) found that cash conversion cycle analysis provided more explicit insights for managing a fi rm's working capital position (in a manner that will assure the proper amount and timing of funds available) to meet a fi rm's liquidity needs. Gentry et al ( 1990 ) took into account both the timing of the fl ows and the amount of funds used in each segment of the cycle by introducing the concept of weighted cash conversion cycle (WCCC) which provided management, Boards of Directors, credit analysts and students of fi nance insightful information for evaluating shortrun fi nancial management performance. Barth et al ( 2001 ) developed models which showed how each accrual component refl ected different information relating to future cash fl ows.…”

Cash Conversion Cycle and Firms’ Profitability – A Study of Listed Manufacturing Companies of Pakistan

“…Gentry et al (1990) suggested that cash conversion cycle affects the market value of a firm. Lamberson (1991) suggested, during expansion in economics, liquidity increases to some extent by working capital management but there is no noticeable change seen during economic slowdown.…”

Liquidity-Profitability Tradeoff Existence in Turkey: An Empirical Investigation Under Structural Equation Modeling

“…Thus, any increase in cash or cash-similar positions creates a tradeoff on profitability by lying behind passive funds to generate profit. In this sense, liquidity ratios as a measure of company's ability to pay debt obligations and its margin of safety play an important role on evaluating the financial decisions of tradeoff between liquidity and profitability (Gitman, 1974;Richard & Laughlin, 1980;Hawawini et al, 1986;Kamath, 1989;Gentry et al, 1990;Boer, 1999;Eljelly, 2004).…”