Conversion Cycle Research Articles

Working Capital Management and Leverage to Profitability: Case of Manufacturing Firms in Indonesia

This study aims to investigate whether Working Capital Management (WCM) and leverage affect firm profitability. Data concern was gathered from Bloomberg database terminal. Sample is manufacturing companies listed in Indonesian Stock Exchange (IDX) over the period of 2014 – 2020, which already established for some time. WCM is measured by using Cash Conversion Cycle (CCC), profitability is proxied with ROA while leverage is proxied by Debt-to-Equity. We find that the length of CCC days does not affect profitability, while the higher proportion of debt to equity will reduce profitability, on the other hand, the higher sales growth will enhance better firms’ profitability performance. Our findings contribute to understanding of the relationship of CCC and leverage on profitability in emerging markets.

Responsibility Accounting and Profitability of Listed Companies in Pakistan Stock Exchange

Business operations requires well-structured activities into firm different departments and best utilization of capitals in small or large size firms was sole objective to meet the expectation of profit and preference of investors. To meet these expectations of investors was a challenge for firm managers as shown by many early studies. The objective of this study was to analyses the impact of responsibility accounting on firm profitability measurement proxies of listed firms the in the Pakistan stock exchange. Ex-post facto design of research was take on. Study utilized the cost of sale, operating cost, quick ratio, cash conversion cycle as a responsibility accounting variables using firm size as control and proxies used for profitability were earnings per share, profit before tax, return on assets and return on equity. To test the study hypothesis, all listed firms in the PSX till 30th June 2021 was considered for population of the study. Study used a sample of all 38 sectors top listed companies using purposive and stratified sampling technique using data from the period 2011 to 2021. Study data were taken out from listed firms annual reports published on their website and also taken from PSX website after auditor’s scrutiny reports. Descriptive and inferential statistics were used to test the study data. Study used panel least square techniques fixed or random effect model. Study results of Hausman test favours of random effect model. So study reports the result of random effect model. Findings of the study shows that responsibility accounting (RA) variables affect significantly on profit before tax as P value is less than 0.05 of the listed firm in PSX during the period. Study also revealed that cash conversion cycle and firm size has insignificant association with PBT. Results also shows that F-Stat=3.469, AdjR2=.0.145, p=0.000. Study results with earnings per share and return on assets shows that a non-significant behavior with and without control variable. There is a significant difference in the result of EPS as well as return on assets with and without the control variable of firm size. Findings of the study of responsibility accounting have significant association on return on equity while non-significant effect on return using firm size as control variable. Results of the study also shows the behavior of cost of sale, operating costs, firm quick ratio, cash conversion cycle and firm size has either positive or negative relationship with profitability measurement proxies of listed firm. depends on different conclusion of the study shows that profitability proxies has affected by responsibility accounting of listed firm in Pakistan stock exchange in Pakistan. Based on the findings and conclusion, managers of the listed firm must focus more on measuring the profitability in such a way complete understanding of responsibility accounting. They must make sure to assign proper task handing over with clear objective, proper process of appraisal, proper budgeting of the achievable investment, develop team cross functional tasks as well as system of proper reward which create profit for the firm to achieve goal of owners.

Financial Sustainability in Agri-Food Companies: The Case of Members of the PDO Parma Ham Consortium

Agri-food companies play an economic, social, and environmental role. In Italy, the typical products protected by the European Union with the PDO and PGI marks are spread throughout the national territory, even in disadvantaged ones, and generate turnover, employment, and positive effects in related industries. These companies are often of medium or small size (SMEs) and are financially constrained. The research applies the assessment of financial sustainability to the balance sheet statement (BSS), financial ratios (FRs), interest coverage ratios (ICRs), duration of the cash conversion cycle (CCC), and net working capital (NWC) data. It shows that companies in the sector have high capital intensity in both the fixed asset (FA) and NWC cycles. Profitability is largely eroded by the cost of debt (COD). Financial sustainability is calculated through the following: (1) the duration of the cash conversion cycle (CCC), broken down into the cycle lengths of inventory, receivables, and payables; (2) the calculation of the income and financial margins generated by the management and their correlation; (3) the calculation of financial ratios (FRs) and the verification of financial leverage (ROA > ROD); (4) the calculation of income and financial interest coverage ratios (ICRs) and tests on the significant differences between them. The application of ICRs with the financial methodology applied in the research makes it possible to (1) improve the assessment of financial sustainability and reduce the related risk and (2) reduce the information asymmetry between the company and the bank, facilitating access to credit. The duration of the CCC is negatively correlated to profitability (ROE), while size and economic performance are positively correlated. The ICRs (interest coverage ratio) calculated with the financial approach are statistically different from the ones calculated with the economic one. The application of the result is relevant to industry operators and for future research. The research is replicable; the results can be tested on other sectors of the agri-food sector and disseminated to operators.

Working capital management in the food and beverage industry: Evidence from listed European companies

Optimizing current assets and their financing resources is of great importance for firms to sustain their existence with the highest level of profitability. However, empirical evidence from the food and beverage industry on the effects of working capital management (WCM) on profitability is scarce and mixed. This study aims to understand how various components of WCM affect the profitability of listed European food and beverage (F&B) companies. For this purpose, static panel data methodology was used to test the relationship between profitability and WCM measured by the cash conversion cycle and its components. The results were checked for robustness by using dynamic panel data methodology. Our results indicate a negative relationship between profitability and the cash conversion cycle. Unlike previous studies that have analysed a single country, this study provides evidence based on analyses of the largest possible sample of listed European F&B companies.

Herding Trend in Working Capital Management Practices: Evidence from the Non-Financial Sector of Pakistan

Working capital management requires careful attention from corporate managers because it plays an important role in corporate stability. The social belongingness of managers induced them to learn from their society, colleagues, and overall industrial movement. They also learn from their peers that have more strategic efficiency. In line with these arguments, the objective of the current study is to explore the peer influence on corporate working capital management practices. For regression analysis, we utilized ten years of data (2009–2018) of non-financial publicly listed firms at PSX (Pakistan Stock Exchange). We used the cash conversion cycle (CCC) as a proxy variable to measure working capital management (WCM). We employed panel fixed effect and system GMM (generalized method of moments) models to estimate regression between the variables of the study. The empirical findings suggest the significant impact of peer WCM on corporate WCM. They also suggest the significant impact of other variables that determine the WCM. This study recommends social learning policy for corporate managers. They can learn from their peers to manage the working capital. Most previous studies discuss peer influence on investment decisions, corporate cash holding, financing policy, etc., but no study explores such a relationship specifically in the case of Pakistan.

Synthesis and Surface Properties of Photoresponsive Gemini Surfactants: Implication for Remediating PAHs-Contaminated Groundwater

The efficient utility of surfactants remains a daunting task for groundwater remediation. In this study, we have synthesized a conventional photoresponsive surfactant 4-[4-[(4-butylphenyl)azo]phenoxy]butyldimethylethylammonium bromide (AzoPB) and a gemini photoresponsive surfactant N1,N2-bis[4-[4-[(4-butylphenyl)azo]phenoxy]butyl]-N1,N2-tetramethylethane-1,2-diammonium bromide (AzoPBT) for solubilizing PAHs in groundwater. The two surfactants' photosensitivity, surface properties, and solubilization/release ability for phenanthrene (Phe) and acenaphthylene (Ace) were studied in detail. Under UV-light irradiation for 15-20 s, the two surfactants can be converted from trans to cis, while cis-to-trans isomerization can be achieved under visible-light irradiation for 1 min. Compared to AzoPB, AzoPBT exhibited strong surface properties such as lower critical micelle concentration (0.52 mM), surface tension (γ, 28.94 mN·m-1), minimum area (Amin, 1.72 × 10-8 nm2), and higher maximum adsorption (Γmax, 96.55 mol·m-2). The solubility of Phe and Ace in the AzoPBT aqueous solution (12.84 and 14.27 mg/L) was much higher than that in the AzoPB aqueous solution (7.51 and 8.77 mg/L) and gradually increased as the surfactant concentration increased in both aqueous solutions. Compared to AzoPB, gemini surfactant AzoPBT exhibited stronger solubilization ability. After four cycles of cis-trans isomerization conversion, AzoPBT could still reduce the hydrophobicity of Phe in natural groundwater, although the solubility of Phe decreased slightly. Additionally, the release capacity of AzoPBT was significantly higher than that of AzoPB during the cyclic solubilization-release process. The results indicated that gemini photoresponsive surfactants should be preferable to conventional photoresponsive surfactants for groundwater remediation due to their higher solubilization and release efficiency for Phe in the cyclic solubilization and release process, which can improve repair efficiency, minimize secondary pollution, and reduce remediation costs.

The Effect of Capital Structure on Corporate Performance: Panel Empirical Evidence of an Emerging Capital Market

ABSTRACT The goal/purpose/objective of the inquiry is to empirically investigate the impact of capital structure (CS) on firm performance (FP), from an emerging capital market perspective, Ghana Stock Exchange (GSE). Using financial data from 36 listed-firms on the GSE, spanning 2010–2020, and employing a robust dynamic panel System of Generalized Method of Moment (GMM), this inquiry examined CS-FP-nexuses. Results revealed that whilst total-debt-to-total-equity-ratio, total-debt-to-total-assets-ratio, long-term-debt-ratio, and financial risk exhibited negative associations with FP; total-equity-to-total-assets-ratio, short-term-debt-ratio, cash conversion cycle, total assets turnover, tangibility, sales-growth, firm size, and firm age revealed positive associations with FP, suggesting that highly leveraged-firms are susceptible to insolvency due to high debt-financing cost with worsened macroeconomic instability effect via increased sensitivity of the economy to shocks. Recommendations were made to policymakers to revamp Ghana’s capital market to encourage equity-investment and also entreat listed-firms to improve upon their profitability and utilize more retained earnings as an internal-financing source to minimize the interest cost on debt-financing. By utilizing data on all the 36 firms listed on the GSE, an uncharted/unexploited path, this current inquiry is one of the few studies that has contributed to the literature on capital structure-performance nexus in Ghana, an emerging West African country south of the Sahara.

Investigation of the multi-layers of imprinting on corporate working capital management

PurposeThe paper aims to investigate the imprinting effect on working capital (WC) management as higher-level managers' transition to chief executive officer (CEO) positions. This paper proposes that WC management defined as a shorter cash conversion cycle (CCC) can be carried forward to the new firm when the managers are appointed as a CEO.Design/methodology/approachThe authors employ a multivariate regression approach. The data in this study come from two sources: Execucomp which provides data for corporate managers of the largest 2,000 USA firms including S&P 1,500 US and Compustat which provides financial information of firms.FindingsThe authors find a positive imprinting effect of “new” CEOs on WC outcomes – proxied by the CCC. CCC shortens by approximately 16 days when CEOs are efficient managers at previous institutions, predominantly derived from improvements in inventory and payables. The effect is sensitive to individuals' age, familiarity with the industry and high-pressure circumstances.Practical implicationsThe paper includes important implications of WC management for firms to consider, especially during economic crises when liquidity management is a priority.Originality/valueThis paper extends the literature on the imprinting effect on managerial decision-making. The paper offers evidence of cooperative yet dynamic efforts in managing WC during CEO turnover events, which are unique findings.

Unraveling the critical role of iron-enriched sludge hydrochar in mediating the Fenton-like oxidation of triclosan

The traditional Fenton system is subject to the low efficiency of the Fe(III)/Fe(II) conversion cycle, with significant attempts made to improve the oxidation efficiency by overcoming this hurdle. In support of this goal, iron-enriched sludge-derived hydrochar was prepared as a high-efficiency catalyst by one-step hydrothermal carbonization and its performance and mechanisms in mediating the oxidation of triclosan were explored in the present study. The hydrochar prepared at 240 °C for 4 h (HC240-4) had the highest removal of triclosan (97.0%). The removal of triclosan in the HC240-4/H2O2 system was greater than 90% in both acidic and near-neutral environments and remained as high as 83.5% after three cycles, indicating the broad pH applicability and great recycling stability of sludge-derived hydrochar in Fenton-like systems. H2O2 was activated by both persistent free radicals (PFRs; 19.7%) and iron (80.3%). The binding of Fe(III) to carboxyl decreased the electron transfer energy from H2O2 to Fe(III), making its degradation efficiency 2.6 times greater than that of the conventional Fenton reaction. The study provides a way for iron-enriched sludge utilization and reveals a role for hydrochar in promoting iron cycling and electron transfer in the Fenton reaction.

Ni(OH)2/CoS heterostructure grown on carbon cloth for robust supercapacitor and methanol electrocatalytic oxidation

Heterojunction construction is a promising strategy to enhance the charge transfer efficiency, which subsequently optimizes the utilization of the electrode material. Herein, the constructed Ni(OH)2 nanosheets on ZIF-67-derived CoS core deposited on carbon cloth (Ni(OH)2/CoS/CC) possesses a superior performance (561.6 mA h g–1 at 1 A g–1) to Ni(OH)2/CC electrode (199.4 mA h g–1). Hybrid supercapacitor (HSC) with a Ni(OH)2/CoS/CC cathode and an active carbon (AC) anode (Ni(OH)2/CoS/CC//AC) provides a remarkable energy density of 90.8 W h kg–1 at 800 W kg–1 and keeps 59.7 W h kg–1 even at 25,600 W kg–1, higher than most of the reported Ni(OH)2-related device, and possesses a marvelous capacity retention of 92.2% over 10,000 charge-discharge cycles. Concurrently, Ni(OH)2/CoS/CC as an efficient electrocatalyst displays an excellent electro-catalytic activity towards methanol oxidation. The outstanding electrochemical performance of Ni(OH)2/CoS/CC is chiefly due to the mediation of the Co2+/Co3+ redox cycle for the rapid conversion of Ni2+ into Ni3+, which greatly boosts the charge-transfer efficiency in the supercapacitors and methanol electro-oxidation. This work provides a rational way to obtain high-power electrode material for supercapacitors (SCs) and electrocatalytic methanol oxidation in direct methanol fuel cells (DMFCs).

A performance study of R717 and R22 as the working fluid for OTEC plant

The purpose of this paper is to compare the thermal efficiency of an ocean thermal energy conversion (OTEC) cycle using R717 and R22 working fluids. An OTEC system typically operates at the temperature difference between the average warm surface seawater of 30 °C and the cold deep seawater of 8 °C. The temperature difference will then power a turbine to produce electricity. R22 and R717 are two potential working fluids to be used in the OTEC cycle to absorb heat due to their saturation temperature. However, R22 is associated with higher global warming potential and the global warming potential (GWP) of 1,760, compared to R717 with zero GWP. The study shows that the thermal efficiency of R22 is 0.211% higher than R717. Moreover, the thermal power required by the water circuit to cool/heat the OTEC circuit for R717 is 13% higher than R22. However, the required working fluid flow rate of the R717 system is 81.5% lower than R22, making the former significantly smaller in size.

Financial condition, working capital policy and profitability: evidence from Indian companies

PurposeThe purpose of this paper is to examine the impact of working capital management (WCM) on profitability under different financial conditions (constraint/unconstraint) and WCM policy (aggressive/conservative). Furthermore, the study investigates the existence of optimal working capital levels under different financial conditions and WCM policy.Design/methodology/approachTwo-step system generalized method of moments and fixed effect models are used to analyze the data collected from Prowess database from 2011 to 2020 for a sample of 1,104 Indian manufacturing companies.FindingsThe study finds an inverted U-shaped relationship between working capital and profitability in all financial conditions and working capital policy. This finding advocates the existence of an optimal level of working capital that equates the costs and benefits of holding working capital to maximize the companies’ profitability. However, holding working capital beyond the optimal level negatively affects profitability. Companies under financial constraints with aggressive working capital policies have the lowest optimal cash conversion cycle (CCC). Furthermore, the relationship of working capital with profitability and the optimal CCC varies owing to firm age and industry group.Originality/valueTo the best of the authors’ knowledge, this is the first paper that incorporates the impact of working capital on firm’s performance from both financial constraint (unconstraint) and aggressive (conservative) working capital policy perspectives in the Indian context. Furthermore, this study also contributes in terms of reflecting the effect of firm age and industry in determining the optimum CCC of the firms.

Working capital management and profitability of listed manufacturing companies in selected African countries

There is a need for manufacturing companies to monitor their working capital for the purpose of ensuring continuity. This study examined the effect of working capital management on the profitability of listed manufacturing companies in selected African countries from 2014 to 2019. The selected countries are Botswana, Ghana, Kenya, Nigeria, South Africa and Zambia. The criteria for selecting these countries were that they must have a functional stock exchange and be a member of the Commonwealth of nations for the sample period. The data were extracted from the respective countries’ stock exchanges from 2014 to 2019 and were analyzed using descriptive statistics (to compare performance across countries), a panel unit test, and the panel fully modified least squares method. The findings show that net profit ratio (NPR) varies across the countries based on different practices. The study also discovered that the account receivables period and cash conversion cycle have a positive and significant relationship with financial profitability. Account payment period and inventory management have a positive and insignificant relationship with profitability. The study recommends that emphasis should be placed on the components of working capital policy to ensure survival of the company because of its impact on profitability.

Affects of Working Capital Management on Firm’s Performance: Evidence from Bangladesh

Working capital is a proportion of an organization's liquidity and monetary wellbeing which assesses the performance and profitability of an organization inside a limited period. The ceramic business is one the most troublesome and lengthy process industry comparing other industries. This industry is immense and includes bigger cycle which makes challenges to present the performance with genuine information. This paper is an attempt to investigate the affects of working capital management on firm’s performance of ceramic industries in Bangladesh. For this intent, ceramic corporations enrolled in Dhaka Stock Exchange (DSE) & Chittagong Stock Exchange (CSE) have been chosen and the investigation covers a period from year 2016 to 2021. Accordingly, secondary data from reputed ceramic manufacturers listed on DSE & CSE have been chosen to outline the measurable impacts of working capital management, also execution of firms by utilizing dynamic board information investigation. The results demonstrates that, inventory and cash conversion cycle periods are longer than expected. Also the industry is highly dependent on accrued sales and receiving cash from the sales are longer comparing other industry. The study clearly defines the significant level of relationship between the firm’s performances which is affected by different components of working capital management.

Corporate Governance In Cash Management, Net Working Capital, And Cash Holding

Manufacturing companies need effective cash management to meet their capital expenditures and cash holding. Effective cash management needs to be supported by good governance so that it can determine adequate cash holding. Independent variables in this study were measured by cash flow, cash conversion cycle, capital expenditure, net working capital, and board of commissioners' activities. Governance measured by the board of commissioners' activities is also a moderation variable. The data in this study were processed and analyzed using Eviews 10 for the period 2017 to 2020. The panel's data regression results show that the cash conversion cycle and net working capital have a negative influence on cash holding. Cash flow, capital expenditure, and board of commissioners' activities have no effect. The moderation regression test results show that the board of commissioners' activities could not moderate the influence of cash flow, cash conversion cycle, capital expenditure, and net working capital on cash holding.

Unravelling the CO2 capture and conversion mechanism of a NiRu–Na2O switchable dual-function material in various CO2 utilisation reactions

The mechanism of a NiRuNa/CeAl dual function material in successive cycles of CO2 capture and conversion was investigated. Carbonyls and carbonates were formed during CO2 capture, and a spillover mechanism occurred to form the desired products.

FeCo alloy nanoparticles encapsulated in hollow N-doped carbon as a bifunctional electrocatalyst for aqueous zinc–air batteries with a low voltage gap

Developing bifunctional catalysts with low reversible oxygen reaction potentials (ΔE) to improve the energy conversion efficiency and cycling stability of rechargeable zinc–air batteries (ZABs) remains a huge challenge.

Impact of cash conversion cycle on financial performance: an empirical study of listed companies in Botswana

Impact of cash conversion cycle on financial performance: an empirical study of listed companies in Botswana

Uloga upravljanja obrtnim kapitalom u ostvarivanju profitabilnosti preduzeća u Srbiji

Most authors argue that working capital management has a significant role in achieving profitability. The aim of this research is to determine an influence of working capital management on the profitability of 141 Serbian companies with the highest level of business income that operate in the domestic manufacturing sector. Based on the applied System generalized method of moment (SYS-GMM) model, the authors show that the longer inventory conversion cycle has a negative and statistically significant impact on the profitability of the observed companies, while the other control variables, such as liquidity, financial leverage, activity and sales growth do not affect profitability. Based on the obtained results, the authors may conclude that the role of working capital management in achieving profitability in Serbian manufacturing companies is relatively significant during the period from 2016 to 2020. The obtained findings are significant for financial managers of manufacturing companies in the Republic of Serbia since they provide useful information about the intensity and direction of certain determinants of profitability. On the other hand, the results of this research are also of interest to wider public and policymakers, considering the fact that profitable manufacturing companies provide jobs, pay taxes, produce necessary goods and services and contribute to the creation of social well-being.

Impact of Cash Conversion Cycle (CCC) on Firm Performance: Evidence from OIC and non-OIC Countries

Impact of Cash Conversion Cycle (CCC) on Firm Performance: Evidence from OIC and non-OIC Countries