Inventory Conversion Period Research Articles

The Impact of Ownership Authority on Cash Conversion Cycle in Public Hospitals: A Comparative Analysis of Provincial and County Hospitals

(1) Background: The aim of the paper is to identify and assess if there are differences concerning the cash conversion cycle (CCC) according to different types of ownership authority of hospitals. The main research hypothesis developed for the purpose of this study assumes that the ownership authority is of great importance for the short-term financial management analyzed through the prism of the cash conversion cycle in hospitals. (2) Methods: A statistical hypothesis testing method is employed in the empirical part of the study, analyzing differences both in the values of the cash conversion cycle itself as well as in the values of its components, i.e., inventory conversion period, receivables conversion period, and payables conversion period. The research sample consists of public hospitals subordinated to different types of ownership authorities, i.e., provinces and counties. (3) Results: It turns out that there are indeed statistically significant differences between the provincial and county hospitals as far as the cash conversion cycle and its components are analyzed, which supports the research hypothesis. (4) Conclusions: The county hospitals are characterized by a better financial situation as compared to their provincial counterparts concerning CCC management.

Inventory Management Practices and Their Impact on Operational Efficiency: A Case Study of MGSSK Sugars Ltd.

In today’s highly competitive business environment, effective inventory management is vital for maintaining operational efficiency and ensuring long-term sustainability. Proper inventory control reduces excess stock and prevents stock outs, leading to cost reduction and improved cash flow. By utilizing precise forecasting and strategic replenishment methods, companies can enhance their adaptability to market changes and sustain a competitive advantage. This research provides a thorough examination of inventory management metrics spanning five years. The primary objective of the study is to evaluate the effectiveness of inventory management. The data was primarily collected from secondary sources, including five years of company inventory records. To analyze the data, the ratio analysis method was applied. The results demonstrate notable improvements in the company’s operational efficiency. Key performance indicators include a steady rise in the inventory turnover ratio and a reduction in average stock levels, showcasing effective inventory control aligned with increasing demand and minimizing surplus stock. Moreover, the study reveals a decreasing trend in inventory as a proportion of current assets, indicating a strategic shift away from relying on inventory for revenue generation. Additionally, variations in raw material values, coupled with consistent material consumption, suggest fluctuations in raw material usage efficiency. Furthermore, the relationship between the raw material turnover ratio and inventory holding period highlights the company’s proficiency in optimizing inventory management. The declining inventory conversion period indicates successful transformation of inventory into sales, boosting cash flow and operational efficiency. This improvement is attributed to advanced forecasting and stock replenishment strategies.

The Impact Of Working Capital Management On Profitability In Micro And Small Processed Food Enterprises In Indonesia

Effective management of working capital is essential for the profitability and long-term sustainability of micro and small-scale processed food businesses. However, at present, the business has not yet developed strong competency in managing working capital efficiently. This can certainly increase the potential for business bankruptcy, especially in the processed food business. This research examines the impact of working capital management, liquidity, and solvency ratios on the profitability of 1,563 micro and 241 small processed food enterprises in Indonesia. Multiple linear regression is used to assess the relationship between working capital management and profitability. The independent variables include the payable deferral period, inventory conversion period, current ratio, and debt-to-asset ratio, while profitability, as the dependent variable, is measured by return on assets (ROA). The findings indicate that both the payable deferral period and debt-to-asset ratio significantly affect the profitability of micro and small businesses, with the current ratio having a particular effect on the profitability of small businesses. These findings suggest that improving financial management practices, such as daily sales optimization and enhanced cash flow monitoring, could significantly enhance profitability in the micro and small processed food sector.

The Impact of Working Capital Management on Financial Performance: Evidence from Sokoine University of Agriculture

This study aims to investigate the effects of working capital management (WCM) components on financial performance of Sokoine University of Agriculture (SUA), focusing on how variations in the Average Collection Period (ACP), Average Payment Period (APP), Inventory Conversion Period (ICP), and Cash Conversion Cycle (CCC) influence financial performance measured in Gross Operating Profit (GOP). The study adopted a longitudinal research design utilizing a time series data from SUA’s annual financial statements covering the fiscal years 2013/14 to 2022/23. A multiple linear regression analysis was conducted to assess the effects of the WCM components on GOP, providing a comprehensive understanding of their financial implications. From the analysis, it was revealed that lnACP and lnCCC are negatively associated with GOP, indicating that delays in receivables collection and extended cash conversion cycles diminish financial performance. Conversely, lnAPP is positively related to GOP, suggesting that longer payment periods for liabilities can enhance financial performance. A longer lnICP also negatively impacts GOP, underscoring the need for effective inventory management. Moreover, this study offers fresh insights into the financial management practices at SUA, highlighting the significant effect of WCM on institutional profitability. By providing evidence of how different components of WCM affect financial outcomes, it delivers practical recommendations for improving financial performance through strategic management of working capital. The research contributes valuable knowledge to both academic and practical discussions on financial management in educational institutions.

Working Capital Management and Profitability: With Special Evidence from Agriculture Companies Listed on the National Stock Exchange

The study attempted to analyze the relationship between working capital management (WCM) and the profitability of agriculture companies. The data were collected from four agricultural companies listed on the National Stock Exchange during 2013-2021. The results showed that RCC and CCC had a significant negative relationship with the ROA of agriculture companies. The negative relationship implied that profitability was lower if the cash conversion cycle was longer. The study concluded that a reduction in the receivables collection cycle and cash conversion cycle could lead to an enhancement in the profits of the agriculture company. The findings also highlighted the significant positive impact of ICC and PDC on the ROA of agriculture companies. It implied that longer the duration of the inventory conversion period and payment to suppliers led higher profitability for the companies. Therefore, to maintain a specific level of inventories for proper working capital management and improved profitability, agricultural companies should invest in current assets with the help of a financial institutional support system. Policymakers could develop regulations to encourage the amount of current assets in the working capital of agricultural companies, leading to profitability.

Working Capital Management and Financial Performance of Listed Agricultural Companies in Nigeria

This study examined the effect of working capital management on the financial performance of selected Agricultural manufacturing firms in Nigeria. The components of working capital management are the inventory conversion period, accounts receivable period, accounts payable period, and current ratio while the financial performance is proxied by ROA. The study adopts an ex post facto research design. The population of the study comprised five Agricultural companies listed on the Nigerian Securities Exchange as of December 2022. A purposive sampling technique was used to select four companies that have complete data. Time series data were collected using secondary sources from the published financial statements of the companies and the Nigerian Stock Exchange from 2011 to 2022. Descriptive statistics and inferential statistics using correlation and regression analyses were employed for the statistical analyses. This study found that there is a negative and statistically insignificant effect of INVCP on the ROA of the selected agricultural manufacturing companies. Also, there is a negative statistically insignificant effect of ACRVP on ROA. However, there is a positive statistically insignificant effect of ACPP and current ratio on the ROA of the selected manufacturing firms. The study concludes that efficient and effective working capital management is of utmost importance in Agricultural manufacturing firms in Nigeria. The study recommends that there is a need for the implementation of strategies that focus on optimizing inventory management processes to reduce carrying costs without compromising operational efficiency. It is also suggested these companies need to address these challenges by optimizing receivables management. Keywords: Working Capital Management, Accounts Receivable Period, Accounts Payable Period, Return on Assets

Firm Performance of Saudi Manufacturers: Does the Management of Cash Conversion Cycle Components Matter?

The purpose of this study is to examine the liquidity management of a corporation. It aims to examine how managing cash conversion cycle components affects corporate performance. A dataset of 88 firms listed on the Saudi Stock Exchange between 2018 and 2022 was analyzed using both pooled OLS and fixed effects regression models. A sample of 84 firms listed on the Saudi Stock Exchange for the period from 2018 to 2022 was used. Both the pooled OLS and the fixed effects regression models were used. This study’s key findings are: (1) there is a strong negative correlation between the time it takes to convert inventory into sales (inventory conversion period) and firm performance. If inventory does not sell quickly, profit tends to be lower. (2) Firm performance demonstrates a strong inverse relationship with the duration it takes for companies to collect cash from customers, commonly known as the accounts receivable collection period. A short accounts receivable collection period may become collectible and increase a business’s profitability and performance. (3) There is a highly significant negative link between the time taken to pay creditors (days payable outstanding) and firm performance. A short average payment period, indicated by a low payment period, suggests that the firm is promptly settling its bills and obligations without any delays.

Working Capital Management and Financial Performance of Listed Agricultural Companies in Nigeria

This study examined the effect of working capital management on the financial performance of selected Agricultural manufacturing firms in Nigeria. The components of working capital management are the inventory conversion period, accounts receivable period, accounts payable period, and current ratio while the financial performance is proxied by ROA. The study adopts an ex post facto research design. The population of the study comprised five Agricultural companies listed on the Nigerian Securities Exchange as of December 2022. A purposive sampling technique was used to select four companies that have complete data. Time series data were collected using secondary sources from the published financial statements of the companies and the Nigerian Stock Exchange from 2011 to 2022. Descriptive statistics and inferential statistics using correlation and regression analyses were employed for the statistical analyses. This study found that there is a negative and statistically insignificant effect of INVCP on the ROA of the selected agricultural manufacturing companies. Also, there is a negative statistically insignificant effect of ACRVP on ROA. However, there is a positive statistically insignificant effect of ACPP and current ratio on the ROA of the selected manufacturing firms. The study concludes that efficient and effective working capital management is of utmost importance in Agricultural manufacturing firms in Nigeria. The study recommends that there is a need for the implementation of strategies that focus on optimizing inventory management processes to reduce carrying costs without compromising operational efficiency. It is also suggested these companies need to address these challenges by optimizing receivables management. Keywords: Working Capital Management, Accounts Receivable Period, Accounts Payable Period, Return on Assets Journal Reference Format: Adesina, O.D., Oluwadare, O.E. & Ogunleye, W.A. (2024): Nigerian Textiles in Sustainable National Development: Forces of Adversity. Humanities, Management, Arts, Education & the Social Sciences Journal. Vol. 12. No. 2, Pp 9-22.. www.isteams.net/humanitiesjournal. dx.doi.org/10.22624/AIMS/HUMANITIES/V12N2P2

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.

Inventory Management and Financial Performance of Listed Industrial Goods Companies in Nigeria

The study sought to determine the relationship between inventory management and financial performance of listed industrial goods companies in Nigeria. The predictor variable proxies used include inventory turnover and inventory conversion period while the referents for the criterion variables used for the study were net profit margin and return on assets. The study adopted the use of an ex-post facto research design. Secondary data were used in the study, which was collected from ten listed industrial goods companies in Nigeria for the 2018 to 2020 financial year. The statistical tools used for the study were descriptive statistics, regression analysis and Pearson’s product-moment correlation coefficient. The result of the finding shows that there is a significant positive relation between inventory turnover, inventory conversion period and net profit margin as well as return on assets of listed industrial goods companies in Nigeria. The study, therefore, concluded a significant relationship between inventory management and financial performance of listed industrial goods companies in Nigeria. The study recommended that the management of listed industrial goods companies should monitor inventory to ensure that optimum levels are maintained at all times to improve performance.

CASH CONVERSION CYCLE AND PROFITABILITY FOOD AND BEVERAGE COMPANIES IN INDONESIA

One measure used to measure the efficiency of working capital is Cash Conversion Cycle (CCC). The cash conversion cycle is a cycle that describes the length of time it takes a company to convert inventory and receivables into cash and pay debts. The lower the cash conversion cycle, the better. This study aims to analyze the relationship between the cash conversion cycle and profitability. The samples in this study were 17 food and beverage companies listed on the Indonesia Stock Exchange for the 2018 to 2022. This research found that there is a negative relationship between the cash conversion cycle and profitability as measured by Return on Assets and Return on Equity. The shorter the inventory conversion period and the receivables collection period and the longer the debt repayment period, the less cash conversion cycle can be. Reduced or lower cash conversion cycles indicate that the company has been able to optimize the use of its working capital so as to increase profitability.

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

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).

The Effect Of Working Capital Management And Fixed Assets Investment On Profitability (Study On Automotive And Component Companies Listed On The Indonesian Stock Exchange)

Purpose - This study aims to analyze the influence of working capital management and investment in fixed assets towards profitability. Design/methodology/approach - This research was implemented in the automotive and part companies listed on the Indonesia Stock Exchange for the period 2006 – 2014. The sample was taken using the method of purposive sampling. Eight companies were selected for a sample. Used multiple regression analysis as statistical method Finding - The results of the research show that CCC and AP have negative and considerable influence on ROA, AR have positive and not considerable influence on ROA, while IVR and FAT have positive and considerable influence on ROA. LVR as a control variable has a negative and not significant effect on ROA, while NPM has a positive and considerable influence on ROA Originality - Keyword - working capital management, investment in fixed assets, profitability, return on assets, cash conversion cycle, average collection period, average payment period, inventory conversion period, leverage, net profit margin. Paper Type – Research Paper

Working Capital Management on the Firm’s Profitability of Steel Sector Firms in India

This study investigates the effect of working capital management (WCM) on the profitability of a sample of Indian steel companies. The analysis is based on financial data from BSE Dollex 200 steel sector firms from 2011 to 2020. The effects of WCM were determined using panel data analysis, pooled ordinary least squares (OLS), fixed effect model (FEM), and random effect model (REM). This study revealed that Inventory Conversion Period, Cash Conversion Cycle, and Accounts Payable Period significantly negatively impact the profitability of firms in the Indian steel industry.

Does Working Capital Management Impact How Well a Company Performs? Panel Data Analysis on the Textile Industries of Bangladesh

Managing working capital is vital to the expansion and development of manufacturing companies. The performance of Bangladeshi textile industries and the implications of working capital management are the main focus of this study. Working capital is represented by the inventory conversion period, receivable collection cycle, payable deferral cycle, and cash conversion cycle, whereas firm performance is determined by ROA. From 2013 to 2022 ten years panel data were collected from the annual reports of ten listed textile companies of Bangladesh. Panel Least Square (PLS), fixed affect, random effect, and the Hausman test were all executed using the STATA program to determine the influence of independent factors on the dependent factor. The ROA of Bangladesh's textile industries was found to be significantly affected by the Inventory Conversion time, Receivables Collection time, and Cash Conversion Circle, but not by the Payable Deferral time.

Determinants of Trade Credit Supply and Shareholders’ Return in Developed and Developing Countries

This study analyzed the relationship between firm-specific determinants and trade credit supply. Unlike past studies, average collection period is used as a proxy of trade credit supply. Further, impact of trade credit supply on shareholder return is examined in the study. This study compared the results among different income groups consisting of developing and developed countries (lower-middle income, upper-middle income, and high income). Data of six countries is collected from DataStream for the period 2002-2018. Kruskal Wallis test revealed that firms of lower-middle income developing countries collected receivables early as compared to other countries. Generalized method of moments (GMM) is applied to test the relationship between determinants and trade credit supply. The findings of the study showed that for all firms, average payment period, inventory conversion period and net profit margin of supplier significantly increase while cash flow volatility and leverage significantly decrease the trade credit supply. The relationships are similar across different group of countries except net profit margin. However, the impact of determinants on trade credit supply is different in different groups. In addition, an optimal period of trade credit supply is found. Longer average collection period beyond optimal period decreases shareholder returns. In each income group, optimal period of trade credit supply is different. These results have implications for managers across developed and developing countries to optimize trade credit supply policies.

Impact of Working Capital Management Components on Profitability: A Case Study of Shivam Cement Limited

The paper shows the impact of working capital management on the profitability position of the only listed cement industry of Nepal, i.e., Shivam Cement Limited (SHIVM). The paper has applied correlation coefficient and regression analysis to interpret the data defines as dependent and independent variables. The paper used net profit margin (NPM) as a dependent variable, while the receivable conversion period (RCP), payable deferral period (PDP), inventory conversion period (ICP), cash conversion cycle (CCC), current assets to total sales ratio (CASR), and current liabilities to total sales ratio (CLSR) are taken as independent variables to see an impact of working capital on profitability of the SHIVM. The paper found that SHIVM is efficient in generating revenue by utilising current assets and current liabilities. The paper also found that neither RCP nor ICP or CCC was seen as related to the profitability of the SHIVM. Nevertheless, only the PDP has a negative impact on the NPM of the SHIVM. This shows that an increase in the PDP for the SHIVM would not lead to an increase in its profitability. ICP of SHIVM is only highly correlated with the CCC, as the nature of the industry maintaining a bulk inventory also determined the relation.

DETERMINANTS OF CORPORATE GROWTH: EMPIRICAL INVESTIGATION OF THE SOUTHEAST EUROPEAN COMPANIES

The growth of companies is always a current and challenging topic for corporate managers who tend to maximize growth. In order for companies to grow they need to undertake investment projects with a positive NPV that will increase production capacity, output and sales. But, on the other hand, the financing of new assets should be in a way that will not deplete financial resources and will enable sustainable growth. In this paper, we investigate the internal company-specific determinants of corporate growth in Southeast Europe on a sample of 791 companies. We found that SEE companies achieved moderate annual growth of 6.73% per year. This is primarily and mostly due to the small volume of capital investments, which in turn is a result of poor operating performance and low profitability. Retained earnings are the primary internal source of investment financing along with additional borrowing for these companies that have no other financing opportunities available, operating in underdeveloped financial market. The growth of the companies in SEE is positively affected by capital investments, financial leverage, operating cash flow, ROA, ROE, firm’s size, net profit margin and assets turnover. The growth of the companies in SEE is negatively affected by non-debt tax shield, tangibility, account receivable collection period, inventory conversion period and cash conversion cycle. Companies in SEE need to improve working capital management practices, to increase its effectiveness and efficiency, in order to generate greater profitability and consequently greater company growth.

Managing working capital for profitability; Experience in the Saudi SME sector

This study is an attempt to examine the relationship between Assertive investment, inventory conversion period, cash conversion period, firm performance, and market value. Moreover, this study also examined the mediating role of firm performance. The data for this research was collected from the employees working in the SME sector of KSA. A self-administrative survey was conducted to collect the data. After three reminders, 68.4% of questionnaires were returned, and 66.7% were found to be duly completed and used in this research. The data was gleaned from these questionnaires and was later analyzed using SPSS 25 and Smart PLS 3. The study’s results revealed that except for the inventory conversion period, all other chosen parameters affect the market value of the Saudi SME sector. At the same time, the rest of the direct effects are confirmed. On the other hand, the mediating role of firm performance is confirmed between CCP, ICP, and MV. The findings of this study are helpful for the policymakers of the SME sector in KSA.

Moderating Effect of Ownership Structure on the Relationship between Working Capital Management Decisions and Financial Performance of Tea Firms in Kenya

Purpose: The general objective of this research study was to examine the moderating effect of ownership structure on the relationship between working capital management decisions and financial performance of tea firms in Kenya. Expansive research studies are available on the strategies employed by tea firms to boost their financial performances. However, Very minimal of these research studies are geared towards the contribution of working capital management decisions employed by these companies within the tea sector in Kenya.
 Methodology: The study employed a correlational research design. The data was collected was collected from the audited financial statements of all the multinationals and KTDA managed tea firms in Kericho, Bomet and Nandi counties of Kenya. The data was analyzed by employing both descriptive and inferential statistics.
 Findings: This research study revealed that there exists a moderating effect of ownership structure on the relationship between working capital management decisions and financial performance of tea firms in Kenya.
 Unique contribution to theory, practice and policy: The research study recommended that the KTDA managed tea firms should be advised to adopt the strategies employed by multinational tea firms in order to boost and improve their financial performance. Tea firms are strongly cautioned against increasing accounts receivables period, accounts payables payment period and inventory conversion period because this would minimize their financial performance in the long-run.