The Relationship Between Working Capital Management And Firms Profitability: An Empirical Investigation For An Emerging Asian Country

Charitou, Melita; Lois, Petros; Santoso, Halim Budi

doi:10.19030/iber.v11i8.7162

Cited by 27 publications

(27 citation statements)

References 5 publications

(4 reference statements)

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“…This result can be interpreted that a longer net trade cycle leads to high carrying cost. These are in line with the earlier studies (Ching et al 2011;Charitou et al 2012).…”

Section: Discussionsupporting

confidence: 93%

The determinants of working capital management and firms performance of textile sector in pakistan

Tahir

Anuar

2015

Qual Quant

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The aim of this study is to determine the relationship of working capital management and the firm's profitability in the textile sector of Pakistan. A sample of 127 textile firms listed in the Karachi stock exchange for the period 2001-2012 are used in the study. The study uses the dynamic panel generalized method of moments to analyze the data. The findings revealed that average collection period in days, net working capital level, current assets to operating income, current assets to sales ratio, current liabilities to total assets has negative impact on return on assets, whereas the accounts payable period in days, inventory turnover in days, cash conversion cycle, net trade cycle, cash turnover ratio, current assets to total assets ratio, and current ratio has a positive association with profitability. In case of the control variables, sales growth and firm size have positive associations with profitability, while financial debt ratio, gross domestic product, inflation and interest depicted negative results. The findings highlight the significance of the working capital components with profitability in the textile sector of Pakistan and recommends that by designing and implementing effective policies on working capital, the firm's profitability can be enhanced.

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“…This result can be interpreted that a longer net trade cycle leads to high carrying cost. These are in line with the earlier studies (Ching et al 2011;Charitou et al 2012).…”

Section: Discussionsupporting

confidence: 93%

The determinants of working capital management and firms performance of textile sector in pakistan

Tahir

Anuar

2015

Qual Quant

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“…Essoussi (2010) explains that consumers in developing countries are more familiar with the country of manufacture idea. Indonesia, as a developing country which is growing rapidly (Charitaou et al 2012), generally considers developed countries to be superior than the developing countries currently are at producing products. Therefore, because of the familiriaty with the "made in" concept, consumers are more focused on information about the country of manufacture, and it has no difference even with high or low levels of involvement as shown in Table 5.…”

Section: Resultsmentioning

confidence: 99%

The Role of Involvement as a Moderating Variable in a Country of Origin Study

Matoati

Syahlani

2017

GADJAH MADA INT. J. BUS.

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Abstract:The aim of this study is to examine the effect that the country of design and the country of manufacture has on the perceived quality of a product, and the role of involvement as a moderating variable. The conceptual framework has been tested using laboratory experiments that included a 2x2x2 between the subject's factorial designs. Participants were assigned by using a randomization method and data was analyzed using a one-way and two-ways ANOVA. The results indicated consumers' involvement, as a moderating variable, limited the strength of the country of design and the perceived quality's relationship as this relationship is found to be stronger in circumstances where the consumers' involvement was greater than in the less involved group's condition. However, consumers' involvement did not have any role as a moderating variable in the relationship between the country of manufacture and the perceived quality. Abstrak: Tujuan penelitian ini untuk menguji pengaruh negara asal desain dan negara produksi pada kualitas produkpersepsian, dan peran keterlibatan sebagai variabel pemoderasian. Penelitian ini menggunakan desain eksperimen laboratorium, yaitu desain faktorial 2x2x2. Partisipan dibagi ke dalam kelompok eksperimen dengan metode randomisasi dan data dianalisis dengan uji one-way dan two-way ANOVA. Hasil menunujukkan peran keterlibatan konsumen, sebagai variabel pemoderasian, membatasi kuatnya hubungan antara negara asal desain dan kualitas persepsian, karena hanya pada kondisi keterlibatan tinggi, negara asal desain berpengaruh pada kualitas persepsian. Namun, ketelibatan konsumen tidak mempunyai peran pada hubungan negara asal produksi dan kualitas persepsian.

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“…This is demonstrated by increasing its short-period cash cycle resulting in increasing profitability and market value of the company, and vice versa. Study by Charitou et al (2012) in any industrial sector of IDX over the period 1998 -2010. However, the results of this study do not support the efficiency of WC to create the profitability, because it turns the longer period of the funds are embedded in the WC to the impact of increasing profitability.…”

Section: Literature Reviewmentioning

confidence: 99%

“…According to Chaklader and Shrivastava (2013), WCM failure could threaten liquidity and profitability and become the most important and challenging aspect of the overall corporate performance. For that, Charitou et al, (2012) argues that capital market research is needed on the importance of organizational resources management, particularly WC management. The emphasis on firms' resource efficiency is, because it may have an important impact on financial performance.…”

Section: Introductionmentioning

confidence: 99%

“…However, research on manufacturing companies listed in Indonesia Stock Exchange (IDX) has found different results. Research conducted by Charitou et al (2012) based on Indonesian Stock Exchange data during 1998 -2010. The result of the study didn't support WC efficiency, because it turns the longer period of the WC funds actually increase profitability.…”

Section: Introductionmentioning

confidence: 99%

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The Integrated Measuring of Working Capital Management Efficiency on Financial Performance in Indonesia Stock Exchange

de¹,

Indiastuti²,

Febrian³

2015

IMBR

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The purpose of this study is to determine the differences effect of working capital efficiency on financial performance during periods of crisis. The measurement is made during the crisis compared to the entire period of observation by using cash conversion cycle (CCC) and working capital policy (both investment policy and financing policy) on the profitability (by return on assets) and market value (by Tobinâ€™s Q). Using all annual financial data of 104 manufacturing firms listed in Indonesia Stock Exchange (IDX) over the period 2005-2013. These periods include the global financial crisis. The panel data set was developed for nine years, which produced 936 firms-years observations. This study uses multivariate regression models with hierarchical regression analysis approach. This approach uses the global financial crisis period as a dummy variable. The results showed that there were differences in the effect of the cash conversion cycle (and its components) and working capital policy on profitability during the crisis period compared to the whole period. In contrast, no differences effect the cash conversion cycle (and its components) and working capital policy on the value of the company in the crisis period compared to the whole period. The manufacturing industries do not apply the efficiency in the management of working capital. The global financial crisis tends the companies to change their working capital policy more efficiently. The researcher can extend this study by doing a qualitative research how to chief financial officers invest and finance day-by-day operation.

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The Relationship Between Working Capital Management And Firms Profitability: An Empirical Investigation For An Emerging Asian Country

Cited by 27 publications

References 5 publications

The determinants of working capital management and firms performance of textile sector in pakistan

The determinants of working capital management and firms performance of textile sector in pakistan

The Role of Involvement as a Moderating Variable in a Country of Origin Study

The Integrated Measuring of Working Capital Management Efficiency on Financial Performance in Indonesia Stock Exchange

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