Cash Conversion Cycle Research Articles

Cash Conversion Cycle in Multi-Specialty Hospitals for Active Treatment from Varna Region

Cash conversion cycle is an essential aspect of holistic financial management and metric for its efficiency. However, there is a limit of empirical evidence for its implementation in Bulgaria. The main purpose of this article is to study the cash conversion cycle in multi-specialty hospitals for active treatment (MBAL) from Varna region in the period 2018-2022. Cash conversion cycle assessment includes inventory turnover, receivables collection period and obligations payment period. Only 4 MBALs fall in the scope of the analysis. The small number of hospitals and results volatility limit the opportunity to formulate essential conclusions and generalizations. During the period one of the hospitals, stand out with negative values of cash conversion cycle. The remaining MBALs demonstrate a slowdown in the inventory turnover. One of them has stable indicators for receivable collection period, obligations payment period and cash conversion cycle. Others extend receivable collection period, shorter obligations payment period and as a result – extend cash conversion cycle.

Cash conversion cycle across industries

The purpose of this research is to assess whether the Cash Conversion Cycle differs between industries, by looking at Days Inventory Outstanding, Days Sales Outstanding and Days Payables Outstanding. This research provides an overviewof Cash Conversion Cycle in two different industries and discusses how each component influences Cash Conversion Cycle. It uses a sample of 172 data points (43 firms) from multinational companies operating worldwide. Based on data retrieved from Bloomberg and from the annual reports of 23 Fast-Moving Consumer Goods companies and 20 major airline companies, a univariate and bivariate (correlation) analysis was done. The analyses for both industries cover four years, from 2009 to 2012, a time span that includes a period of economic downturn. The findings suggest that Cash Conversion Cycle differs between industries. It also differs depending on the size of the company. While its components – Days Inventory Outstanding, Days Sales Outstanding and Days Payables Outstanding – directly affect Cash Conversion Cycle, there are also other factors at play, such as inventory costing system, bargaining power with suppliers and customer credit policies. The economic downturn, and particularly the specificities of each industry make this overview relevant. The research addresses managers who should take Working Capital Management decisions, which can extend or reduce Cash Conversion Cycle, as it contributes to a better understanding of how the size of a firm, its inventory system, liquidity, and payables are associated to the Cash Conversion Cycle and consequently affect companies’ profitability.

Cash Conversion Cycle, Asset Turnover, Capital Expenditure and Firm Value: The Mediating Role of Profitability

Purpose: To examine the impact of the cash conversion cycle, asset turnover, and capital expenditure on firm value, using profitability as the mediating factor. Methodology/approach: Using a sample consisting of 61 non-cyclical consumer goods listed firms in Indonesia from 2016 to 2021, a structural equation modeling is employed to analyze the direct, indirect, and total effects of the vari-ables being studied on firm value. Findings: The cash conversion cycle does not have signi-ficant direct or total effects on firm value, but it has a negative and significant indirect effect on firm value through profitability. Asset turnover and capital expen-ditures directly significantly affect firm value in different directions, but they both have positive and significant total effects on firm value. Profitability fully mediates the effect of the cash conversion cycle on firm value, and partially mediates the effect of capital expenditures on firm value. Practical implications: To ensure value creation, firms are suggested to monitor the cash conversion cycle, enhance asset turnover, and ensure the profitability of capital expenditures. Originality/value: Providing empirical evidence on the mediating role of profitability in analyzing the effect of the cash conversion cycle, asset turnover, and capital expenditures on firm value.

DETERMINAN CASH HOLDING PADA PERUSAHAAN MANUFAKTUR DI BURSA EFEK INDONESIA

This study aims to determine the effect of firm size, leverage, profitability, net working capital, and cash conversion cycle on cash holding in manufacturing companies listed on the Indonesian stock exchange. The research period is from 2017 to 2020. The study used a purposive sampling method and produced 260 research samples. The results of data processing with Eviews 12 student version lite show that the most suitable model used in predicting cash holding is the Random Effect Model (REM). Of all the independent variables, only three independent variables were found to affect cash holding, i.e. profitability, net working capital, and cash conversion cycle. The results showed that profitability and net working capital had a significant positive effect on cash holding while the cash conversion cycle had a significant negative effect.

PENGARUH EQUITY DAN ASSET TERHADAP FINANCIAL PERFORMANCE PADA PERUSAHAAN SEKTOR INDUSTRI KONSUMSI

This research aims at how the effect of Capital Structure, Total Asset Turn Over, Liquidity, Cash Conversion Circle and Firm Size on Financial Performance in consumption industry companies listed on the Indonesia Stock Exchange during 2017-2019. The sample was selected by purposive sampling method and the valid data were 32 companies. The data processing technique uses descriptive-inferential analysis of panel data assisted by the EViews (Econometric Views) 9 Series program and Microsoft Excel 2019. The results of this study indicate that the Debt to Equity Ratio (DER) and Current Ratio (CR) have a significant negative effect on Financial Performance, while the variables Total Asset Turn Over (TATO), Cash Conversion Cycle (CCC), Firm Size (SIZE) have no effect on Financial Performance. The implication of this research is the need for improvement in managing assets and capital to maintain the viability of the company and maximize financial performance and attract investors to the company.

The effect of cash conversion cycle, leverage, sales growth, and firm size on profitability in manufacturing companies in the consumer goods industry sector listed on the Indonesia Stock Exchange (IDX)

This study aims to analyze the effect of (1) cash conversion cycle on company profitability, (2) leverage on company profitability, (3) sales growth on profitability, (4) firm size on profitability of manufacturing companies in the consumer goods industry sector listed on the Stock Exchange Indonesia in 2018-2021. The population in this study are manufacturing companies in the consumer goods industry sector which are listed on the Indonesia Stock Exchange. Meanwhile, the sample in this study was determined using the purposive sampling method, namely manufacturing companies in the consumer goods industry sector for four consecutive years from 2018-2021 so that a total sample of 52 companies was obtained with 186 observation data. The analytical method used is multiple linear regression method using the IBM SPSS Statistics 22 program. The results of this study conclude that (1) the cash conversion cycle has a negative and not significant effect on company profitability, (2) leverage has a negative and significant effect on company profitability, (3) sales growth has a positive and significant effect on company profitability, (4) firm size has a positive and significant effect on company profitability.

Implications of working capital management and operational continuity on company profitability in the technology sector idxtechno 2022

Profitability is a metric to gauge a company's ability to generate satisfactory returns on its invested assets, sales, and equity. This research seeks to explore how the management of working capital and the sustained operation of companies impact their profitability within the IDXTECHNO sector over three years, from 2020 to 2022. Operating capital management is defined by three key indicators: the cash turnover ratio (CTR), inventory turnover ratio (ITR), and accounts receivable turnover ratio (ARTR). Operational continuity is assessed through the cash conversion cycle (CCC), and profitability, in this study, is represented by return on assets (ROA). A purposive sampling method was used to select seventeen sample companies, and multiple linear regression analysis was employed. The results indicate a significant influence of working capital management and operational continuity on profitability.

Role of Bank Credit and External Commercial Borrowings in Working Capital Financing: Evidence from Indian Manufacturing Firms

Determinants and levels of working capital financing (WCF) in the manufacturing sector have been empirically proven to impact firm profitability across emerging as well as developed nations. With time, firms adjust toward financing their working capital requirement (WCR), although the speed of adjustment, financing constraints, and bargaining power are subject to variations. In this study, we estimate the effect of bank credit and firm foreign currency borrowing on working capital financing with three distinct models for manufacturing firms in India. We examine the relationship between short-term foreign currency borrowings and WCF. Further, we investigate if the internal capital market affects WCF in the form of business group affiliation; lastly, we assess the impact of bank dependency and financial distress on WCF. We conclude that the debt–equity ratio becomes relevant, whereas firm characteristics such as age, size, and asset tangibility become irrelevant. Our original contribution to the literature is the finding that even smaller emerging market firms with well-managed, low debt exposure have improved access to WCF. Our results support that financial distress negatively impacts WCF but deviates from macroeconomic fundamentals, such as the GDP growth rate. This indicates deterioration in the health of Indian manufacturing, as a capital-intensive sector. Bank dependency remains significant, wherein smaller firms and those without a dividend pay-out continue to have longer cash conversion cycles and less efficient WCR. As a unique finding, we note foreign currency borrowings significantly contribute to WCF in the case of less developed credit markets in emerging economies such as India.

Effect of Cash Conversion Cycle on Company Profitability: A Study on Indonesian Food and Beverage Listed Companies

The Indonesian Food and Beverage industry is a dynamic and pivotal sector in the Indonesian business ecosystem, contributing significantly to the nation's economic growth and reflecting its cultural diversity. This paper delves into the relationship between the Cash Conversion Cycle and the profitability of Indonesian Food and Beverage listed companies. By examining this intricate connection, the study aims to provide valuable insights for financial managers, policymakers, investors, and researchers within this sector. This study used panel data regression with a purposive sampling method with a total of 687 samples that spans from 2007 until 2022. Data processing in this study uses Eviews 9. The research adopts Gross Profitability as a precise measure closely linked to working capital management and tests hypotheses related to the Cash Conversion Cycle components, including Days of Inventory Outstanding, Days of Sales Outstanding, and Days of Payable Outstanding. The findings reveal that Days of Sales Outstanding significantly and negatively impacts Gross Profitability, emphasizing the importance of efficient accounts receivable collection for profitability. Days of Inventory Outstanding, while marginally significant, also shows a negative association with Gross Profitability. In contrast, Days of Payable Outstanding does not exhibit statistical significance in explaining variations in Gross Profitability. These insights provide valuable guidance for managers in optimizing working capital management. Moreover, the paper recommends future research directions, including long-term analysis, industry-specific exploration, the influence of macroeconomic factors, comparative studies, and qualitative research to deepen our understanding of the Cash Conversion Cycle 's role in the Indonesian Food and Beverage industry and enhance financial management practices.

Working Capital Management Practices on Profitability of Manufacturing Firms Listed in Nairobi Securities Exchange, Kenya

The major purpose for which any company is formed is to generate profits for the shareholders. Profits are meant to keep growing and not static if the business is to be sustainable. Profits refer to the gains used for the benefit of the business stakeholders and is generally calculated after a specified period of time, for example within a financial year. The profitability of a business can be described as the ratio that provides more information about the profit number benchmarked against a given point of reference like the investments or equity of a firm. Through the profitability, the company is able to determine its combined success in the market that is crucial to its growth and survival more so to manufacturing firms. Profitability ratios are also used in examining the financial health of a company. The profits of the 9 manufacturing firms listed in the Nairobi Securities exchange has been dwindling for the period under study triggering the researcher to want to know whether declining profits was in any way related to the working capital management practices. The general objective of the study was to investigate working capital management practices on profitability of manufacturing firms listed in Nairobi Securities Exchange. The specific objectives of the study were; to analyze the effect of cash holding management practices on profitability of manufacturing firms listed in NSE, to determine the influence of inventory management practices on profitability of manufacturing firms listed in NSE, to assess the effect of current liabilities management practices on profitability of manufacturing firms listed in NSE and to analyze the influence of debtors’ management practices on profitability of manufacturing firms listed. The research relied heavily on the cash conversion cycle theory, the profit innovation theory, and the credit theory. The research strategy used in this study was explanatory. Nine manufacturing companies trading on the Nairobi Stock Exchange were the focus of the research. Due to the small sample size, the research relied on census data. Secondary data was gathered from the publicly available financial statements of the targeted organizations for the time period. The data was analyzed using the 23rd edition of the Social Science Statistical Package (SPSS).It was decided to do a panel data analysis. Secondary data in the form of panel data was used for the study, which spanned the years 2014 to 2022. The way in which cash is handled by management has a major impact on the bottom line. The financial success of companies trading on the NSE's manufacturing index is also significantly impacted by how well they manage their inventories. A company's financial success is significantly impacted by how well it handles its current obligations and by how well it handles its debtors. According to the study's findings, NSE-listed manufacturing businesses' financial performance may be described by differences in cash holding management methods, inventory management practices, Current liabilities management strategies, and debtors' management practices alone. Based on the findings, it was suggested that NSE-listed manufacturing firms improve their financial performance by implementing better cash holding management practices, inventory management practices, Current liabilities management practices, and debtors' management practices.

The impact of working capital management on the profitability of listed halal food and beverage companies

PurposeThis study investigated how working capital management (WCM) influences the profitability of listed halal food and beverage companies.Design/methodology/approachThe study utilized a sample of 56 listed halal food and beverage companies operating in Indonesia, Malaysia, Saudi Arabia, Pakistan and the United Arab Emirates (UAE). Unbalanced panel data were generated from the Bloomberg database between 2008 and 2021. Besides, the study employed the two-step system generalized method of moments (GMM) technique for the estimation, which can address the models' endogeneity, heteroskedasticity and autocorrelation problems. Also, feasible generalized least square (FGLS) regression was applied to check the robustness of the results.FindingsThe study revealed that the cash conversion cycle (CCC) and accounts receivable period (ARP) significantly reduced firm profitability. Also, the inventory conversion period (ICP) significantly reduced return on assets (ROA) but insignificantly influenced return on equity (ROE). However, the results showed that the accounts payable period (APP) significantly increased firm profitability. These findings are robust to the results obtained by applying FGLS regression.Research limitations/implicationsThe study utilized a sample of only the listed halal food and beverage firms that operate in Indonesia, Malaysia, Saudi Arabia, Pakistan and the United Arab Emirates (UAE).Practical implicationsThe study suggests that the management of listed halal firms should adopt an aggressive policy in managing their working capital in order to enhance their financial performance. This could be attained by lowering CCC when ARP and ICP are reduced and APP is increased.Originality/valueThis study contributes to the literature by providing cross-country empirical evidence showing how working capital and its components affect the financial performance of firms that solely produce or buy and sell halal food and beverage products in five countries.

Financial Performance and Working Capital Management Practices of Nigeria’s Consumer Goods Manufacturing Firms

This study examines the impact of working capital management practices on the financial performance of consumer goods manufacturing firms listed on the Nigeria Stock Exchange. The analysis is based on a sample of 20 firms over a ten-year period from 2011 to 2020, utilizing a generalized method of moment (GMM) model. Four indicators of working capital management, including the cash conversion cycle (CCC), inventory turnover period (IVP), accounts payable period (APP), and accounts receivable period (ARP), are assessed, while return on assets (ROA) is used as the measure of financial performance. The findings reveal that a shorter cash conversion cycle and a higher inventory turnover period positively influence the firm’s financial performance. Conversely, a longer accounts payable period has a negative impact, while a longer accounts receivable period positively affects financial performance. These results highlight the importance of adopting effective working capital management practices for enhancing the financial performance of consumer goods manufacturing firms. The study’s conclusions provide valuable insights for firms, investors, and policymakers, emphasizing the significance of optimizing working capital management to drive financial success.

Exploring the impact of working capital in the U.S. aviation industry for profitability and shareholder value

This study examines how working capital impacts profitability, shareholder value, and the relationship between COVID-19 and airline size for the top ten U.S. commercial airlines from 2010 to 2021. Working capital is the short-financing indicator crucial for airline management facing economic uncertainty. This research applied dynamic panel data regression using the Hausmann-Taylor panel regression and the general method of moments to avoid heteroskedasticity, endogeneity, and unbiasedness. The cash conversion cycle, the current ratio, the quick ratio, and working capital are explanatory variables. Revenue growth rates, earnings-per-share, and return-on-assets are the explained variables for profitability and shareholder values. The authors find that the previous year's activities, days in inventory (DII), days-sales-outstanding (DSO), and COVID-19 as dummy variables impact profitability and shareholder value. The DII, DSO, and days-payable-outstanding of the large airline companies are more prominent than those of small airlines. The value of this study is that it is the first to explore working capital and its impact on profitability and shareholder with its determinants in the airline service industry, including the pandemic period.

Financial Analysis Dashboard Application for Stock Exchange Listed Companies

The current paper aims to outline the development of a web application to streamline the process of analyzing listed companies in a simpler, more concise and more user-friendly way, helping financial analysts make better decisions when placing a trade. The application offers users the ability to obtain financial analysis through a single company search as well as the ability to record transactions to account for price changes. The fundamental analyzes that the application offers start with the analysis of solvency, cash conversion cycle, performance, positioning, liquidity and bankruptcy risk, using public financial data of the companies as well as the current situation of the news and changes they have had place on the market in the last 24 hours. In the case of technical analysis, we can identify indicators that follow the analysis of the share price, the movements, the trend as well as the trading volume.

Cash Management and Financial Performance of Quoted Non- Financial Firms in Nigeria: A Dynamic Robust Least Squares Regression Approach

This study investigates the impact which cash management and the financial performance of selected firms in Nigeria. The period which the study covers is from 2005 to 2020 of 76 non- financial firms quoted on the floor of the Nigerian Exchange Group the information about them are extracted from their financial statements. The results of the dynamic robust least squares indicated that while cash and cash equivalence (CCE), average collection period (ACP), days sales outstanding (DSO), days inventory outstanding (DIO) and sales growth (GSALES) are positively significant with economic value added (EVA); cash conversion cycle (CCC), average payment period (APP), days payment outstanding (DPO), quick ratio (QR), short term debt (STD) and capital expenditures (CAPEX) are negatively significant with it. The study concludes with some recommendations.

A STIUDY ON WORKING CAPTIAL MANAGEMENT” AT ADITYA AUTO PRODUCTS AND ENGINEERING PRIVATE LIMITED, DODDABALLAPUR.

This study delves into the intricacies of working capital management (WCM) within Aditya Auto Products and Engineering Private Limited. The objective is to analyze the company's strategies for efficiently managing, its current assets & liabilities to maintain optimal liquidity and operational efficiency. By examining the company's cash conversion cycle , inventory turnover, & accounts receivable/payable processes, this research aims to provide insights into the effectiveness of Aditya Auto Products' WCM practices. The findings from this study will contribute to a better understanding of company's financial health and provide recommendations for potential improvements in its WCM strategies. Keywords : WCM , Financial health, Operational efficiency, Short-term assets, Liabilities, Liquidity, Resource, Profitability, Cash , Accounts receivable , Accounts payable Inventory, Efficient etc.

An Overview of the Influence of Working Capital Management on Profitability

Working Capital Management is crucial for a company, akin to the company’s life force, enabling it to thrive and survive in the competitive market. In this fiercely competitive world, each passing day holds immense significance in propelling businesses to the next level. This study delves into an analysis of various studies conducted globally over the past few years. Its primary aim is to compile and synthesize the results of these studies, identifying key factors and the impact of maintaining the necessary balance of working capital. Most studies have consistently concluded that a shorter cash conversion cycle yields greater benefits.

Impact of Cash Conversion Cycle on Profitability. An Empirical Study on the Listed Hotel Companies in Sri Lanka

Impact of Cash Conversion Cycle on Profitability. An Empirical Study on the Listed Hotel Companies in Sri Lanka

Determinants of Working Capital Management: A Case of Listed Manufacturing Companies in Tanzania

The study examines on the determinants of working capital management. The study came about following a necessity of managing working capital for efficient running of firm’s day- to-day operations. By taking samples of 10 manufacturing firms listed in Dar es Salaam stock exchange period of 2012-2023. It is found that there are positive and significant effects of firm size, profitability and cash conversion cycle on working capital, while leverage and capital expenditure revealed to be positive and insignificant determinant of working capital management. Morefurther, firm growth and cash flows found to be negative and significant determinant of working capital. It is from those results of analysis, this study recommends the financial managers to efficiently focus much on managing firm size, profitability and gross domestic product while less effort being subjected to firm leverage and capital expenditures to sales management.

Working Capital Management and Profitability of Listed Industrial Goods Companies in Nigeria

Working capital is the capital needed by a business to finance the day-to-day operations of the business. The purpose of this study is to investigate the impact of working capital management and profitability of listed industrial goods companies in Nigeria. The study was anchored on the cost trade-off theory. The methodology adopted in the study was an ex-post facto research design. The population of the study consist of ten industrial goods companies in Nigeria. Secondary data from ten listed industrial goods companies in Nigeria's stock exchange for the period of ten years (2012-2021) was obtained based on a convenient sampling method. The statistical tools used were multiple regression analysis and Pearson product-moment correlation coefficient aided by SPSS version 22.0. The founding showed a negative significant impact between Inventory, Trade Receivable and Net Profit Margin as well as Return on Asset. Whereas a significant positive impact was observed between the cash conversion cycle and net profit margin as well as return on asset. The study concluded a significant impact on working capital management and profitability of listed industrial goods companies in Nigeria. The study recommends that the credit policy of the companies should be structured in such a way as to improve cash flow thereby reducing the firm cash conversion cycle. Also, professionals should be hired where necessary to ensure efficient management of working capital components to increase profitability.