Sensitivity of profitability to working capital management: a study of Indian corporate hospitals

Talha, Mohammad; Christopher, Sauvage; Kamalavalli, A. L.

doi:10.1504/ijmfa.2010.034115

Cited by 33 publications

(14 citation statements)

References 5 publications

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“…In almost all studies on the impact of liquidity on profitability, a highly significant negative relationship was found (Beaumont & Begemann 1997;Bhattacharyya & Raghavachari 1977;Deloof 2003;Garcia-Teruel & Martinez-Solano 2007;Ghosh & Maji 2004;Narware 2004;Shin & Soenen 1998;Soenen, 1993;Talha, Christopher & Kamalavalli 2010). Few looked at the opposite relationship however.…”

Section: Profitabilitymentioning

confidence: 99%

Determinants of Working Capital Investment: A Study of Malaysian PublicListed Firms

Wasiuzzaman¹,

Arumugam²

2013

AABFJ

114

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The paper examines the determinants of the level of investment in net operating working capital by firms in Malaysia. Data from 192 companies spanning a period of 8 years (2000)(2001)(2002)(2003)(2004)(2005)(2006)(2007) are analysed using the OLS regression technique for this purpose. The study finds that in times of economic expansion, younger and smaller firms with less tangible assets, low leverage, high immediate sales growth, high operating cash flows, less volatile revenues and low levels of asymmetric information are likely to have the highest investments in operating working capital. Board characteristics, namely size and the independence of the board, are not found to have any significant influence on the working capital investment of firms. KeywordsWorking capital investment, pecking order theory, asymmetric information, board characteristics The paper examines the determinants of the level of investment in net operating working capital by firms in Malaysia. Data from 192 companies spanning a period of 8 years (2000)(2001)(2002)(2003)(2004)(2005)(2006)(2007) are analysed using the OLS regression technique for this purpose. The study finds that in times of economic expansion, younger and smaller firms with less tangible assets, low leverage, high immediate sales growth, high operating cash flows, less volatile revenues and low levels of asymmetric information are likely to have the highest investments in operating working capital. Board characteristics, namely size and the independence of the board, are not found to have any significant influence on the working capital investment of firms.

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Section: Profitabilitymentioning

confidence: 99%

Determinants of Working Capital Investment: A Study of Malaysian PublicListed Firms

Wasiuzzaman¹,

Arumugam²

2013

AABFJ

114

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“…Several large statistical studies have shown a negative connection between the CCC and the relative profitability ROI (e.g. Deloof, 2003;García-Teruel and Martínez-Solano, 2007;Shin and Soenen, 1998;Talha, Christopher, and Kamalavalli, 2010;Viskari, Pirttilä, and Kärri, 2011;Wang, 2002). This finding has been supported by Marttonen, Viskari, and Kärri (2011) with analytical modelling.…”

Section: Literature Reviewmentioning

confidence: 78%

“…Previous literature has concluded that by shortening the CCC, a company can improve its return on invested capital (ROI) (e.g. Deloof, 2003;Shin and Soenen, 1998;Talha, Christopher, and Kamalavalli, 2010;Viskari, Pirttilä, and Kärri, 2011). There is a research gap in the discussion of the financial aspect of working capital management: the perspective of company owners.…”

Section: Introductionmentioning

confidence: 99%

Appeasing company owners through effective working capital management

Marttonen

Viskari

Kärri

2013

IJMFA

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Abstract:In the dynamic financial climate of the present day, companies should be aware of the potential of effective working capital management in reacting to market transformations. It is important to include the company owner's viewpoint in the research perspective. In this paper, we study the connection between working capital management and the return on equity. The managerial and financial perspectives of flexible asset management are integrated through analytical modelling. We conclude that the return on equity can be improved by shortening the cycle time of operational working capital. Both the interest rate of debt and the debt-to-equity ratio are taken into account in order to study the effects of dynamic financial conditions. Changes in the financial conditions could be compensated through effective management of working capital.

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“…In the case of financial leveraging, the potential to boost debt performance at a comparatively fixed expense and the operation of these loans in the activities of the business generates a greater return than the debt cost, given that the company is capable of doing so. (Talha et al, 2010) shows that when the yield on investment is greater than the expense of assumption, financial leverage is reached. It has the following advantages: raising the yield on the equity of lenders as a consequence of the gap between the funding expense and the return on investment, retaining institutional leverage so borrowers have no management voice, and not splitting the gains made with others.…”

Section: Electronic Benefit Transfer (Ebt)mentioning

confidence: 99%

The Impact of Liquidity and Leverage on Profitability in Industrial Sector in Jordan

Saleh¹,

Jaradat²,

Wedyan³

et al. 2021

RWE

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Financial leverage is linked to the funding structure in terms of the proportion of debt in the capital structure; the higher the financial leverage is, the more the company depends on debt in its financing structure. On the other hand, the lower the debt is, the more the company relies on equity funding. The company thus decides the optimal funding combination that minimizes the company's capital costs and maximizes shareholder returns.The aim of this analysis was to quantify the effect of the analysis on the profitability of the Jordanian industrial sector listed on the Amman Stock Exchange during the period (2008-2017) and on a sample of (54) industrial companies to assess the impact of leverage and liquidity. In order to evaluate the data obtained from the actual financial statements of the industrial companies listed on the Amman Stock Exchange, a descriptive and systematic methodology was used. As a result, the statistical conclusion showed that the effect of liquidity and leverage on profitability was a significant result.

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Sensitivity of profitability to working capital management: a study of Indian corporate hospitals

Cited by 33 publications

References 5 publications

Determinants of Working Capital Investment: A Study of Malaysian PublicListed Firms

Determinants of Working Capital Investment: A Study of Malaysian PublicListed Firms

Appeasing company owners through effective working capital management

The Impact of Liquidity and Leverage on Profitability in Industrial Sector in Jordan

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