Impact Of Cash Conversion Cycle Research Articles

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

Faktor yang Mempengaruhi Profitabilitas pada Perusahaan Industri Wadah dan Kemasan yang Terdaftar di Bursa Efek Indonesia

Profitability is the potential of a business entity to generate income within a certain period of time. The management of a company must be able to consider the factors that affect the company's profitability because this profitability is a determinant of the company's success. This study aims to provide empirical evidence on the impact of cash conversion cycle, liquidity and company size on the profitability of companies in the container and packaging industry listed on the Indonesia Stock Exchange. The population of this study is companies in the packaging industry listed on the Indonesian Stock Exchange from 2018 to 2021, and the sampling was done by purposive sampling method, so 11 sample companies were selected. This data analysis method is a multiple regression analysis using the SPSS version 25 program, and the results of this study show that the cash conversion cycle has a negative impact on profitability, liquidity has a positive impact on profitability, firm size has been shown to have no effect in container and packaging industry companies listed on the Indonesia Stock Exchange.

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

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

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

The Systematic Literature Review: An overview on Working Capital Management and Profitability

This systematic review examines the relationship between working capital management (WCM) and profitability, with a focus on the impact of cash conversion cycle (CCC) on profitability. Out of the 53 independent studies analyzed, only those that used CCC as a measure for WCM were selected for analysis. The review found that efficient WCM, specifically the optimal level of CCC, has a significant impact on profitability. Firms should review their receivables and payable policy to maintain market value, shareholders' wealth, and minimize the risk of bankruptcy. Accelerating cash collections through proper management, effective policies, and corporate strategies also improves profitability. The study highlights CCC as a powerful tool for firms to manage their working capital efficiently. The review suggests that firms should maintain an optimal CCC level and effective management practices to improve WCM and profitability. Further research using qualitative research methods is needed to gain a deeper understanding of WCM practices.

Impact of Working Capital Management on Firm’s Profitability of Automobile Sector Firms in India

The purpose of the article is to look into the impact of working capital management (WCM) on the profitability of Indian automobile companies. The article is based on financial data from automobile sector-listed firms in the BSE Dollex 200 from 2011 to 2020. For panel data analysis, a fixed effect model and a random effect model are used to identify the effects of WCM. Finding of this article revealed that there is a negative and significant impact of cash conversion cycle (CCC), inventory conversion period (ICP) and receivable collection period (RCP) on firm’s profitability in automobile industry in India. And highly recommended that CCC, ICP and RCP should be minimised to maximise the profitability in automobile industry in India.

Working capital management, financial performance and growth of firms: empirical evidence from India

PurposeThis paper aims to investigate how firms growing at a high average rate over a period differ in their working capital management (WCM) efficiency from those growing at a low rate during the same period. It also examines how WCM efficiency impacts firms’ financial performance and how firms’ growth influences this relationship.Design/methodology/approachThe authors have analyzed the difference in WCM efficiency of a sample of 431 nonfinancial firms during 2012 to 2019 by segregating them into above median growth (AMG) and below median growth (BMG) firms. The authors have used fixed effect regression to investigate the impact of cash conversion cycle, inventory days, accounts receivable days and accounts payable days on the financial performance and the effect of growth on this relationship.FindingsThis study finds that AMG firms manage their working capital significantly more efficiently than BMG firms. It also reports that the WCM efficiency impacts the profitability and valuation of firms positively; however, this relationship is more intense for firms growing at a high rate than for those growing at a low rate.Originality/valueThis research should contribute to the less researched area of WCM by finding the effect of growth on the relationship between WCM efficiency and performance. The evidence found in this study may be of interest for industry practitioners and managers in identifying WCM efficiency as an important driver for the financial performance of their firms.

Working Capital Management and Corporate Performance of Quoted Consumer Goods Sector in Nigeria: A Panel Data Approach

This paper aimed at investigating the impact of working capital management (WCM) on corporate performance of quoted consumer goods sector in Nigeria. Specifically, the paper examined the impact of cash conversion cycle (CCC), current ratio (CUR), quick ratio (QUR), asset turnover ratio (ATR), Average Payment Period (APP), Average Collection Period (ACP), and Inventory Collection period (ICP) on return on asset (ROA) of listed Nigerian Consumer goods sector firms from 2009 to 2018 covering 120 cross-sectional units. To ensure that the findings of the study are reliable, accurate, and valid, the study was further subjected to diagnostic tests using the Lagrange Multiplier Tests for Random Effects, Hausman test, and the cross-sectional dependence test. Accordingly, the Hausman test supports the Random Effect Model (REM) while the cross-sectional dependence test revealed that the variables of each company is unique and are independent of those of other companies in the sample. Findings emanating from the REM confirmed a mixed relationship between WCM and ROA. Specifically, the study found that managers can achieve high profitability if it addresses all inventory management issues since quick ratio and inventory conversion period exerted negative insignificant impact on firm performance. Again, the study found that the current ratio, quick ratio, and asset turnover ratio are the main determinants of corporate performance. Hence, the study concludes that WCM is the most efficient way firms can achieve outstanding success. To this end this paper recommends that if firms in the Nigerian Consumer goods sector firms must achieve their core objective of maximizing high returns and minimizing risk, they must pay full consideration on current ratio, quick ratio, and asset turnover ratio.

Does cash conversion cycle affect cost of equity capital?

ABSTRACT This study examines the impact of cash conversion cycle (CCC) on cost of equity (COE). A CCC measures the time it takes for a firm to convert its inventory into cash flows from sales. A CCC is one of several metrics that evaluates a firm’s operational risk, and this paper investigates whether CCC affects COE. Using 29,248 firm-year observations that span 1984–2018, we find that firms with longer CCC have higher equity financing costs. Furthermore, we observe significant moderating effects of product market conditions and information asymmetry. The positive relationship becomes weaker (stronger) with greater competition and demand uncertainty (information asymmetry). Our findings provide useful insights for managers as our results reveal that investors recognize CCC as a value-relevant signal in determining COE.

Cash Conversion Cycle and Value of Listed Oil and Gas Companies in Nigeria

This study investigated the impact of cash conversion cycle on the value of listed oil and gas companies in Nigeria, with the specific objectives of determining its impact on share price and Tobin’s Q. To achieve this, panel data is applied with the use of descriptive, correlational and explanatory research design. The study hypothesised two research hypotheses and generalised least square regression is used in analysing the collected data that were extracted from the annual reports and accounts of eight listed oil and gas companies in Nigeria for the period 2006-2019. Share price and Tobin’s Q were used as proxies for value of firm. The study found that cash conversion cycle has a negative and significant impact on the value of listed oil and gas companies in Nigeria. In view of this finding, the study recommended, among others, that the cash conversion cycle should be reduced as reasonably possible below 365 days when the economic condition is good and vice versa when the economic situation is hard as this will enhance the value positively. It is further recommended that the individual components of cash conversion cycle, such as inventory, receivables and payables, be studied individually as net off effect exist using cash conversion cycle. JEL Classification: G31, G32

Working capital management and profitability of wine firms in France: an empirical analysis

We estimated the impact of cash conversion cycle (CCC) on the return on assets of wine firms in France over the 2003-2014 period. After controlling for factors such as size, growth, tangibility and leverage, we found that CCC had a negative impact on the profitability of French wine firms, suggesting an aggressive working capital management strategy. However, there was no optimal level of CCC allowing firms to maximise their profitability. On the other hand, French wine firms should grant a payment delay to their customers while reducing the delay to sell stocked wines. They should also lengthen the payment delay to their suppliers while considering potential borrowing cost and potential discounts for early payments. A robustness check on two different sub-periods shows that the recent global financial crisis had a significant impact on the relationship between working capital management and the profitability of wine firms in France.

The Impact of Cash Conversion Cycle on Profitability of the Firms with Respect to S&P BSE SENSEX India

Cash Conversion Cycle (CCC) is a crucial tool that influences the firms’ short-term requirements. CCC affects the liquidity requirements of every company, every nature of the business, and every size of the business. In this setting, the present research explores the different aspects of CCC and its influence on profitability related to non-financial companies of the S&P BSE (Bombay Stock Exchange) SENSEX Index in India during 2006-2020. Investigating the factors that affect the CCC and statistically significant impact on firms' profitability across the nature of the business and size of the business is the main focus of this research. The results of this research that significant negative relation observed between CCC and profitability of the firm in more classifications (Teruel & Solano 2007, Garcia 2011, and Nobance et al. 2011) and shorter length of cash conversion cycle increase the profitability of the firm (Manyo 2013 and Ajanthan & Kumara 2017). It is also concluded that this research that results would differ in different nature of the business (Padachi 2006) and different size of the business.

Pengaruh Working Capital Management terhadap Kinerja dan Risiko Perusahaan

It is important to manage and optimized working capital properly due its performance, risk implication and share value to the company. The tradeoff between profitability and liquidity determine the behavior of aggressiveness level of capital management of the company. Therefore, these study objectives are to identify the impact of cash conversion cycle on corporate financial performance and risk, and to identify the impact of aggressiveness level of capital management on corporate financial performance and risk. The study is focusing on 14 manufacture companies listed on Indonesian Stock Exchange. The study showed different result, which the cash conversion cycle was not significantly affecting corporate financial performance and risk; meanwhile the aggressiveness level of capital management was significantly affecting corporate financial performance and risk. Many of hypotheses were not able showed expected result due of limitation of sampling and short observation period or caused by the differences between companies in types, number of assets, liabilities, sales and credit policies.

The Impact of Cash Conversion Cycle on Firm Profitability: Evidence from Nigerian Listed Telecommunication Companies

The objective of this study is to empirically find the effect of cash conversion cycle on corporate profitability of the ICT firms listed on the floor of the Nigerian Stock Exchange. Data are collected from all the listed firms from 2010 to 2014. The data are analyzed using multiple linear regression analysis and the robustness check shows that the data are normal. The findings indicate significant positive relationship between cash conversion cycle and corporate profitability.

Impact of cash conversion cycle for measuring the efficiency of cash management: A study on pharmaceutical sector

Article history: Received December 5, 2015 Received in revised format February 16 2016 Accepted April 12 2016 Available online April 14 2016 We know that Cash Conversion Cycle (CCC) is one of the measures of liquidity management. In this paper, we made an attempt to analyse the impact of CCC on the cash management. In this study we selected five companies from Pharmaceutical Sector, including, Alchemist, Lupin, Dr. Reddy’s Laboratory, Cipla and Ranbaxy. In this study, we used the secondary data for analysis and retrieved from Capitaline database for ten years period from 2002 to 2011. Through cash conversion cycle we can easily determine the working capital requirement. Because, it considers the time gap between expenditure for the purchases of raw materials and collection from sales of finished goods prepared with such raw materials, CCC plays an important role in firm’s short term assets and liabilities as well as success of the firm. Growing Science Ltd. All rights reserved. 6 © 201

The Impact of Cash Conversion Cycle on Services Firms’ Liquidity: An Empirical Study Based on Jordanian Data

Depending on (Warrad et al., 2015) study that represented the impact of turnover ratios on Jordanian services sectors’ performance, which revealed adverse results in comparison with other previous studies on the same sector; the difference, was explained by the operating costs as an explanatory item. The researcher try to investigate again whether the distortion in the operating costs during the period from 2009 to 2012 which resulting from the excess of the increase in operating costs over the increase in revenues in the Jordanian services firms will make differences in the results in the current study from the results in the previous studies.The current study aims to study the impact of cash conversion cycle on the liquidity of Jordanian services firms that expressed by current ratio and quick ratio during the period from 2009 to 2012. The results showed that there is no significant impact of cash conversion cycle on Jordanian services firms’ liquidity, also, there is no significant impact of cash conversion cycle on Jordanian services firms’ current ratio, finally there is no significant impact of cash conversion cycle on Jordanian services firms’ quick ratio, which prove the previous discussion, because of that The researcher recommends services firms’ management to apply a reduction cost strategy to restore the harmony between revenues and operating cost.

Impact of cash conversion cycle on cash holding – A study on FMCG sector

Impact of cash conversion cycle on cash holding – A study on FMCG sector

The impact of cash conversion cycle on firm profitability

Purpose – The purpose of this paper is to seek to investigate the impact of cash conversion cycle (CCC) on performance (i.e. profitability) in Swedish small and medium-sized enterprises (SMEs) over the 2008-2011 period. Design/methodology/approach – The study uses a seemingly unrelated regression (SUR) model to analyse cross-sectional panel data covering 13,797 SMEs operating in four industries. Findings – The study provides empirical evidence that CCC significantly affects profitability. In addition, the firm-level control variables size, age, and industry affiliation significantly affect firm profitability. These findings imply that managers could increase firm profitability by improving their working capital management. Research limitations/implications – The present study is limited to a sample of Swedish SMEs in four industries; further research could examine the generalizability of these findings to other countries and industries. Practical implications – Improved working capital policy could improve firm profitability by reducing the firm's CCC, thereby creating additional firm value. In addition, the results can be used for other purposes, including monitoring of firms by auditors, debt holders, and other stakeholders. Originality/value – The present study contributes to the literature by employing a SUR model to analyse a comprehensive cross-sectoral sample in a high-tax environment. To the authors’ knowledge, this is the first empirical study to address this issue in the Swedish context based on a large data set covering SMEs in various industries.

Cash Conversion Cycle and Firms’ Profitability – A Study of Listed Manufacturing Companies of Pakistan

Cash conversion cycle is one of the most widely used measures to evaluate and measure the risks and returns associated to liquidity management Since every corporate organization is extremely concerned about how to sustain and improve profitability, hence they have to keep an eye on the factors affecting the profitability. The present study is concerned about evaluating how cash conversion cycle affects the profitability of manufacturing sector organizations listed at Karachi stock exchange of Pakistan. The specific research objective of the study is to investigate the existing literature on the role of cash conversion cycle in enhancing return on assets and equity of the companies and to measure the impact of cash conversion cycle on profitability of the manufacturing companies. The results of the study will be helpful for academics and industry experts for policy making and control purposes. The study takes return on equity and return on assets as measures of profitability to represent dependent variables. Firm size and debt ratio are taken as control variables. Cash conversion cycle is considered as independent or explanatory variable. Study takes into consideration 5 years financial statements data starting from 2007 to 2011. Results showed that manufacturing companies are having low average return on asset and high average return on equity with reasonable average cash conversion cycle. Regression results after adjusting for heteroskedasticity of data to minimize the effects of outliers, showed that cash conversion cycle is having significantly inverse association with both return on assets and equity indicating that lesser the cash conversion cycle greater would be the profitability measured through return on assets and equity. Hence the receivable collection period and inventory selling period must be reduced along with the extension of payment period to increase the profitability of manufacturing sector organizations. The study suggested that manufacturing companies are required to well estimate and evaluate the cash flows of the business, to well identify the long run and short run cash inflows and outflows to timely sort out the cash