The impact of working capital management on firms’ performance and value: evidence from Egypt

Moussa, Amr Ahmed

doi:10.1057/s41260-018-0081-z

Cited by 32 publications

(46 citation statements)

References 16 publications

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“…Kayani et al (2020), Pham et al (2020), Musau (2015), and Mathuva (2012) found a positive impact of DPO on firms' profitability. On the other hand, Moussa (2018), Javid and Dalian (2014), and Serrasqueiro (2014) found a negative impact of DPO on firm profitability. Due to mixed findings of previous literature, we propose the hypothesis as follows.…”

Section: Days Payable Outstanding (Dpo) and Firm's Profitabilitymentioning

confidence: 99%

Working capital management and firm’s profitability: Evidence from Czech certified firms from the EFQM excellence model

Yousaf

Briš

Haider

2021

Cogent Economics & Finance

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Working capital management (WCM) is one of the most important decisions for all firms. The main components of WCM are days sales outstanding (DSO), days inventory outstanding (DIO), days payable outstanding (DPO), and cash conversion cycle (CCC). Using a sample of 332 Czech firms, including 20 certified firms from the EFQM (European Foundation for Quality Management) Model, the current study explored the effects of the main components of WCM on firms' profitability. We used two different regression models to test the hypothesis, i.e. pooled regression and maximum likelihood estimation (MLE). The findings of the research revealed all the components of WCM have a negative impact on firm profitability. On the other hand, the interaction terms of the EFQM certified firms with the components of WCM showed a positive impact on firms' profitability which means that there is a positive relationship between the components of WCM of the certified firms and profitability. However, it is examined that the quality certificate/ award from EFQM Excellence Model decreases the firm's profitability. The outcomes of the current research will be beneficial to academics, managers, leaders, and directors of the firms to improve their firm's profitability.

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Section: Days Payable Outstanding (Dpo) and Firm's Profitabilitymentioning

confidence: 99%

Working capital management and firm’s profitability: Evidence from Czech certified firms from the EFQM excellence model

Yousaf

Briš

Haider

2021

Cogent Economics & Finance

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“…The third motivation behind this paper is the fact that a large body of recent research studies has investigated the impact of working capital on corporate performance from the perspective of developed economies especially the US, the UK, and China (i.e., Dalci et al 2019;Ren et al 2019;Laghari and Chengang 2019;Mahmood et al 2019;Goncalves et al 2018;Tsuruta 2018;Aktas et al 2015;Mun and Jang 2015;Enqvist et al 2014;Baños-Caballero et al 2014). Specifically, a small number of studies have focused on emerging economies: Uganda (Kabuye et al 2019), Egypt (Moussa 2018), Vietnam (Le 2019;Nguyen and Nguyen 2018), Malaysia (Yusoff et al 2018), high-growth firms from emerging Europe (Bot , oc and Anton 2017), Pakistan (Habib and Huang 2016), Ghana (Amponsah-Kwatiah and Asiamah 2020), Egypt, Kenya, Nigeria, and South Africa (Ukaegbu 2014). Golas (2020) analyzes the impact of working capital management on firm profitability only for the Polish dairy industry, from the perspective of different elements of working capital.…”

Section: Introductionmentioning

confidence: 99%

The Impact of Working Capital Management on Firm Profitability: Empirical Evidence from the Polish Listed Firms

Anton

Nucu

2020

JRFM

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The purpose of this study is to investigate the relationship between working capital and firm profitability for a sample of 719 Polish listed firms over the period of 2007–2016. The scarcity of empirical evidence for emerging economies and the importance of working capital efficiency motivate the research on the working capital–financial performance relationship. The paper adopts a quantitative approach using different panel data techniques (ordinary least squares, fixed effects, and panel-corrected standard errors models). The empirical results report an inverted U-shape relationship between working capital level and firm profitability, meaning that working capital has a positive effect on the profitability of Polish firms to a break-even point (optimum level). After the break-even point, working capital starts to negatively affect firm profitability. The study brings theoretical and practical contributions. It extends and complements the literature on the field by highlighting new evidence on the non-linear interrelation between working capital management (WCM) and corporate performance in Poland. From the practitioners’ perspective, the results highlight the importance of WCM for firm profitability.

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“…Research findings show a negative and essential profitability effect of the debt-equity ratio (Chandra et al, 2016;Öztürk and Karabulut, 2018;Putri and Nasution, 2018). Companies' age and size influence the company's overall profitability (Goel and Sharma, 2015;Moussa, 2018). Liquidity is a significant concern for businesses and can significantly affect their overall profitability (Gull and Arshad, 2013;Wichitsathian, 2019;Umadevi and Boopathiraj, 2020).…”

Section: Literature Reviewmentioning

confidence: 99%

“…Therefore, high external sources minimize gross profit precisely because of much interest and fixed funds that will not be reinvested in profitable operations. CCC's yield effect can remain distinct (Goel and Sharma, 2015;Moussa, 2018). Notice that when negotiating with the CCC and the gross profit association to assess the REER, the exchange rate, i.e., the REER, should be considered (Sunday, 2018;Hussain et al, 2020).…”

Section: Literature Reviewmentioning

confidence: 99%

Macroeconomic factors, working capital management, and firm performance—A static and dynamic panel analysis

Hussain

Nguyen

et al. 2021

Humanit Soc Sci Commun

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The aim of the study is to explore the interaction effect of macroeconomics indicators, and working capital flows on financial performance in a developing economy. By using the static and dynamic approach of panel analysis, it has been shown that there is a relationship between the components of working capital and the gross profit and cash conversion duration. Second, while interest rates used as an interaction variable with the average payable days have adverse effects, firm performance would decrease if interest rates increase. The average payable duration extends; instead of primarily regressing, the average payable period positively correlates with firm performance. The conversion cycle of cash has a negative relationship, but it reverses its actions after using interest rate interaction. There is a negative relationship with gross profit in the simple regression exchange rate and cash conversion cycle while using the second interaction variable with the cash conversion cycle, has positive effects. In addition, the exchange rate gets higher to increase the cash conversion length, financial performance will be increased. In addition, the exchange rate gets higher to increase the cash conversion length, financial performance will be increased. This study receives new results, the exchange rate increases, companies that can pay early to payable will get higher firm performance while exchange rate and the interest rate have a significant role in changing the firm performance.

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The impact of working capital management on firms’ performance and value: evidence from Egypt

Cited by 32 publications

References 16 publications

Working capital management and firm’s profitability: Evidence from Czech certified firms from the EFQM excellence model

Working capital management and firm’s profitability: Evidence from Czech certified firms from the EFQM excellence model

The Impact of Working Capital Management on Firm Profitability: Empirical Evidence from the Polish Listed Firms

Macroeconomic factors, working capital management, and firm performance—A static and dynamic panel analysis

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