Working Capital Management and Firm Performance: An Empirical Study for Malaysian Public Listed Companies in Property Industry

doi:10.35370/bjssh.2019.1.2-06

Cited by 3 publications

(3 citation statements)

References 29 publications

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“…On the other hand, the beta coefficient of CATA 31.2515 with a t-value of 3.86 (p=0.000<0.01) implies a significant positive impact of the ratio of current assets to total assets on profitability. This result is well-matched with the findings of Padachi (2006) and contradicts the findings of Eya (2016) and Sim and Ming (2019).…”

Section: Impact Of Wcm On Profitabilitysupporting

confidence: 70%

“…The study found the adverse effect of the number of days in inventories and accounts receivable on the firm's value. In the context of Malaysia, Sim et al (2019) found a significant negative influence of the working capital component, i.e., CCC, on corporate profitability measured by ROA. In contrast, the author found no influence of CCC on corporate profitability measured by Tobin's Q.…”

Section: Introductionmentioning

confidence: 95%

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The Impact of Working Capital Management on Profitability: Evidence from Non-Financial Firms Listed in NEPSE

Shrestha¹

2023

Interdis. J. Innov. Res. Nep. Acad.

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Efficient working capital management (WCM) is expected to contribute positively to the firm's profitability. With the aim of analyzing the impact of WCM on the profitability of non-financial firms listed in NEPSE, this paper has used current ratio (CR), debt ratio (TDTA), current assets to total assets (CATA), current liabilities to total assets ratio (CLCA) and inventory conversion period (ICP), receivable conversion period (RCP), payable deferral period (PDP), and cash conversion cycle (CCC) as the measures of WCM. This paper has used annual panel data of 12 non-financial NEPSE-listed firms from 2005/06 to 2019/20. Based on the result of the Breusch and Pagan Lagrangian multiplier and Hausman tests, the study found the Random Effect model as the appropriate regression model. Using the Random Effect regression model, this paper has found the significant impact of WCM on profitability. Likewise, this paper found a significant negative impact of the current ratio (CR) and debt ratio (TDTA) and a significant positive impact of the ratio of current assets to total assets (CATA) on profitability. Further, the finding also reveals that there is an insignificant negative impact of the inventory conversion period (ICP) and receivable conversion period (RCP) and an insignificant positive impact of the payables deferral period (PDP). Thus, this paper concludes that Nepalese non-financial firm can increase their profitability by decreasing the current ratio (CR) and debt ratio (TDTA) and increasing the ratio of current assets to total assets (CATA).

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Section: Impact Of Wcm On Profitabilitysupporting

confidence: 70%

Section: Introductionmentioning

confidence: 95%

The Impact of Working Capital Management on Profitability: Evidence from Non-Financial Firms Listed in NEPSE

Shrestha¹

2023

Interdis. J. Innov. Res. Nep. Acad.

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“…Significantly, shorter collection periods are associated with enhanced financial performance. Consequently, strategic focus should center on devising approaches to shorten debtor collection periods, thereby improving both liquidity and overall profitability(Vartak & Hotchandani, 2019;Ling, et al 2019).…”

mentioning

confidence: 99%

Working Capital Management Strategies of Nigerian Manufacturing Firms and the Effects on Corporate Performance

Edomobi,

Ebiringa (Prof),

Chris-Ejiogu

2024

JARBMA

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The study examined the working capital management strategies of Nigerian Manufacturing Firms and effect on Corporate Performance. Working capital management was decomposed into five variables being account receivable management (ARM), account payable management (APM), inventory management (INVM), cash conversion cycle (CCC) and cash conversion efficiency (CCE) which serve as the explanatory variables of the study while Corporate Performance was proxied by Return on Assets (ROA). The data for the study were collected from the Financial Statement and Annual Accounts of the selected firms covering a data panel framework of 20 years period (2000 to 2020) and nine (9) firms specifically were selected. The analysis was based on the ARDL regression technique was used to estimate the regression model while the probability values of the ARDL regression estimates were used to test the hypotheses at 0.05 level of significance. The result showed that: Account receivable management strategy have long run and no short run effect on return on asset of quoted manufacturing firms in Nigeria; Account payable management strategy have long run and no short run effect on return on asset of quoted manufacturing firms in Nigeria; Inventory management strategy have long and short run effect on return on asset of quoted manufacturing firms in Nigeria; Cash conversion cycle strategy have long and short run effect on return on asset of quoted manufacturing firms in Nigeria; and Cash conversion efficiency strategy have no long and short run effect on return on asset of quoted manufacturing firms in Nigeria. Further analysis revealed that account receivable, account payable inventory management and cash conversion efficiency had causal effects on return on assets. However, there is no causal relationship between cash conversion cycle strategy and return on asset of quoted manufacturing firms in Nigeria. The study thus concluded that working capital management strategies have significant effect on the financial performance of firms, and that the degree of effect differs by period, type of strategy and financial performance indicator. It was recommended among others that management of firms should firms increase the supplies to customers and allow credit to its customers, and firms should also explore the use of short-term credit in financing their business. The study contributed to knowledge by employing long run panel technique in investigating the working capital and firm performance nexus in Nigeria.

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Aggregate and Disaggregate Measures of Operating and Non-Operating Working Capital Influence on Firm Performance: Evidence From Malaysia

Bashir

Regupathi

2021

International Journal of Banking and Finance

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The study is aimed at investigating the following issues: firstly, whether the different types of working capital, namely operating and non-operating working capital influence the short-term (return on assets) and long-term (Tobin’s Q) firm performance differently, and secondly whether the different measures of operating working capital, namely disaggregated and aggregated (cash conversion cycle) operating working capital, influence the short-term (return on assets) and long-term (Tobin’s Q) firm performance differently. It uses the panel data of 208 listed non-financial firms in Malaysia covering the period from 2013 to 2017, and the data has been sourced from Datastream. It employs the panel corrected standard errors regression model. The study has found that quicker sale of inventory increased both the short-term and long-term performance of the firm. Likewise, faster collection of receivables increased the long-term, but not short- term, performance. However, prompter payment of payables increased both the short-term and long-term performance. The study has also found that the disaggregated working capital measures – inventory, receivables, and payables contributed to a more nuanced influence of working capital on performance, compared to the aggregated working capital. The study has provided novel evidence that– higher non- operating working capital increased firm performance.

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Working Capital Management and Firm Performance: An Empirical Study for Malaysian Public Listed Companies in Property Industry

Cited by 3 publications

References 29 publications

The Impact of Working Capital Management on Profitability: Evidence from Non-Financial Firms Listed in NEPSE

The Impact of Working Capital Management on Profitability: Evidence from Non-Financial Firms Listed in NEPSE

Working Capital Management Strategies of Nigerian Manufacturing Firms and the Effects on Corporate Performance

Aggregate and Disaggregate Measures of Operating and Non-Operating Working Capital Influence on Firm Performance: Evidence From Malaysia

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