Profitable Trade-off Research Articles

Costing Techniques And Profitability Trade Off: An Investigation On The Agricultural Firms Listed In The Nairobi Securities Exchange.

Costing techniques have great impact on life and global economy especially the profitability levels of Agricultural companies in the Nairobi Securities Exchange (NSE). The profitability levels in the Agricultural firms in Kenya have declined, stagnated or suffered losses in the recent past leading to price fluctuations hence low profitability levels. The drive of this study was to investigate the costing techniques and profitability trade off of agricultural firms listed in the NSE. Specifically the study sought to establish the effect of job costing on determination of the level of profitability in the quoted agricultural firms in NSE. The study was steered by transaction cost theory and applied descriptive research design. The target population of seven (7) listed agricultural firms listed in the NSE, hence adopting the census technique where all the seven respondents were used. Data collection sheet was used to obtain secondary data from audited published financial statements of listed agricultural firms in NSE. The period of the study was five years from 2018 to 2022. The data collected was analyzed using descriptive statistics that were summarized using mean and standard deviation. Diagnostic tests used to test the research hypothesis included tests of normality, autocorrelation, collinearity and linearity tests. Correlation, regression analysis and multiple linear regression models was carried out to show whether and how strongly changes in costing techniques were related to firms’ profitability and to determine the association amongst costing techniques and profitability. The findings were presented in figures and tables and prose form for its discussions. Job costing had a significant effect on the profitability of agricultural firms listed in the NSE when measured alongside other costing methods. Both the coefficient is positive (β1=0.565) and the p-value is lower than 0.05, indicating statistical significance. The recommendation to the industry is to prioritize Job Costing given its significant positive effect on profitability of agricultural firms should consider implementing and expanding its use. Firms using other costing methods should reassess their effectiveness and consider integrating Job Costing elements into their existing systems. For academia, conduct more studies to authenticate these findings across different contexts, firm sizes and geographical locations within the agricultural sector. Emphasize on Job Costing method in accounting and agricultural management curricula while still maintaining a balanced approach to other costing methods. For policy formulators, consider policies that encourage or incentive the adoption of Job Costing method in agricultural companies like, tax benefits or grants for implementation and developing guidelines or standards of costing.

Shade versus intensification: Trade-off or synergy for profitability in coffee agroforestry systems?

CONTEXTCoffee agroforestry systems (shaded coffee) are considered less productive but more resilient than more intensive production systems. A persistent challenge for coffee farmers is the extreme fluctuations in coffee prices, leading to a loss of profitability and lower investment in production. There are contrasting conclusions regarding the profitability trade-off between increasing productivity through intensification and the sustainability benefits of shade tree coffee agroforestry systems. OBJECTIVEUsing a typology of different intensification and sustainability coffee production strategies in Costa Rica and Guatemala, we assess the economic feasibility and sensitivity of those strategies under likely future scenarios of price and cost variability. METHODSBased on on-farm survey data from a large-scale survey of farmers with information on costs, prices and yields over ten years, a probabilistic cash flow analysis was used to create a stochastic model for net returns. RESULTS AND CONCLUSIONSUnder future price scenarios, the Net Present Value (NPV) for coffee production was greatest for the high-productivity farms with high investment and moderate shade levels. The NPV of low-investment farms was greater (and positive) for highly shaded coffee production than for low shade coffee production (which, on average, had a negative NPV), despite the two having similar levels of investment. Diversification with bananas or avocados in association with coffee only improved NPV for high-value export avocado. Despite the substantially higher production costs for the high productivity systems, they generally maintained higher probabilities of achieving a positive net cash income or achieving a living income under most labour, fertilizer or coffee price scenarios, except a 50% fall in coffee prices. Diversification effects were as sensitive to changes in labour and input costs but in most cases reduced the probability of a more pronounced negative net cash income under low coffee price scenarios. We find an increase in coffee prices by 50% was needed to enable all farmers to achieve a positive net cash income; with an increased probability of achieving returns comparable with a living wage for higher productivity systems. SIGNIFICANCEWe conclude that high-investment, high-productivity coffee production systems are compatible with shade-grown production; more likely to lead to economic success and achieve positive returns under most conditions, except large falls in coffee prices. For farmers with limited capacity to invest, high-shade production systems provide a positive cash return under a broader range of price conditions than low-shade systems.

Liquidity and Profitability Trade-Off: An Analysis of Selected Pharmaceutical Companies

Liquidity and Profitability Trade-Off: An Analysis of Selected Pharmaceutical Companies

Modelling the influence of returns for an omni-channel retailer

More brick-and-mortar retailers open an online channel to increase sales. Often, they use the store to fulfil online orders and to receive returned products. The uncertain product returns however complicate the replenishment decision of a retailer. The inventory also has to be rationed over the offline and online sales channels. We therefore integrate the rationing and ordering decisions of an omni-channel retailer in a Markov Decision Process (MDP) that maximises the retailer’s profit. Contrary to previous studies, we explicitly model multi-period sales-dependent returns, which is more realistic and leads to higher profit and service levels. With Value Iteration (VI) an exact solution can only be computed for relatively small-scale instances. For solving large-scale instances, we constructed a Deep Reinforcement Learning (DRL) algorithm. The different methods are compared in an extensive numerical study of small-scale instances to gain insights. The results show that the running time of VI increases exponentially in the problem size, while the running time of DRL is high but scales well. DRL has a low optimality gap but the performance drops when there is a higher level of uncertainty or if the profit trade-off between different actions is minimal. Our approach of modelling multi-period sales-dependent product returns outperforms other methods. Furthermore, based on large-scale instances, we find that increasing online returns lowers the profit and the service level in the offline channel. However, longer return windows do not influence the retailer’s profit.

Treynor Ratio guided risk-return model for TSO-DSO mutualism considering energy and price volatility

Treynor Ratio (TR), a reward to volatility measure in finance, is used to quantify excess return per unit risk taken by the investor, where risk implies volatility in returns relative to market portfolio return. In this paper, TR is modified (TREP) to suggest the hourly weight of each risky energy asset at which it is worth using in the transmission and distribution levels to sustain the volatility of the market and to yield reasonable returns to both TSO and DSO. Uncertainties in the wind and solar energy sources pose energy-risk and fluctuations in grid power price poses financial risk, and both impact the TSO-DSO profit trade-off. Here, beta is used as the risk measure that evaluates the effect of uncertainty in each energy source on operators’ profit relative to the collective effect of all the energy sources available in the system. When risk is modelled using absolute measures like standard deviation or variance which are independent of market portfolio returns, it discourages risky assets more, to keep a risk-averse profile. By co-optimizing TREP values of TSO and DSO, more realistic portfolios are built by maximizing their expected profits per unit risk in relative terms. The resultant portfolio utilizes higher share of distributed energy resources (DERs) and renewable energy, thereby improving the role of DSOs in the market. The operators’ returns are found to be closer to the market portfolio returns at risks well within the market portfolio risk level.

Bandwidth Expansion Through Large-Amplitude Modulation and Proportional Feedback for Single-Beam Atomic Magnetometers

Atomic magnetometers are widely acknowledged as one of the most sensitive devices for magnetic field measurement. Our study presents a novel method that enables bandwidth expansion of single-beam magnetometers in the spin-exchange relaxation-free regime. This method bases on increasing the modulation amplitude of magnetic field combining with negative feedback with proportional gain. Through our method, the magnetometer&#x2019;s total relaxation rate is moderately increased by elevating modulation amplitude and frequency, and correspondingly, the detection bandwidth experiences dramatic improvement from 230 Hz to 1380 Hz. The application of negative feedback with proportional gain further increases this bandwidth to higher than 4 kHz, which is over 17 times of its original value. The sensitivity of the magnetometer under this condition is measured as 25 fT/<inline-formula> <tex-math notation="LaTeX">$\text {Hz}^{\text {1/2}}$ </tex-math></inline-formula> for open-loop scheme and 35 fT/<inline-formula> <tex-math notation="LaTeX">$\text {Hz}^{\text {1/2}}$ </tex-math></inline-formula> for closed-loop scheme. Comparatively, the sensitivity measured on conventional conditions in our experiment is 12 fT/<inline-formula> <tex-math notation="LaTeX">$\text {Hz}^{\text {1/2}}$ </tex-math></inline-formula>. This approach offers a profitable trade-off that extraordinary expansion of detection bandwidth can be acquired with the price of a little sensitivity loss. Our method is advantageous for miniaturization of atomic magnetometers as no extra hardware is added, which is of special interest for applications including biomagnetic measurement where large detection bandwidth is sometimes in need.

Liquidity – Profitability Trade-Off on the Example of Companies Listed on Main and Alternative New Connect Markets on Warsaw Stock Exchange

The goal of this paper is related to the liquidity and profitability relationship analysis and their maxima assessment in the companies listed in the main and alternative markets of Warsaw Stock Exchange. The trade-off between maximum profitability and liquidity is the result of value maximization and bankruptcy prevention strategies and this approach is expected to be similar in all listed companies due to investors’ expectation. It has been found that there is no difference in management goals in the markets taken into consideration and companies in both research samples maximize profitability within a conservative approach to the liquidity. The maximum liquidity, on the other hand, is determined with a similar level of profitability as measured by ROE on the main market of WSE and NewConnect.

Liquidity – Profitability Trade-Off on the Example of Companies Listed on Main and Alternative New Connect Markets on Warsaw Stock Exchange

The goal of this paper is related to the liquidity and profitability relationship analysis and their maxima assessment in the companies listed in the main and alternative markets of Warsaw Stock Exchange. The trade-off between maximum profitability and liquidity is the result of value maximization and bankruptcy prevention strategies and this approach is expected to be similar in all listed companies due to investors’ expectation. It has been found that there is no difference in management goals in the markets taken into consideration and companies in both research samples maximize profitability within a conservative approach to the liquidity. The maximum liquidity, on the other hand, is determined with a similar level of profitability as measured by ROE on the main market of WSE and NewConnect.

Financial Determinants of Liquidity Positions of Listed Manufacturing Firms on the Nigerian Stock Exchange

The study evaluated the influence of financial determinants on cash holdings of selected quoted manufacturing firms in Nigeria. Specifically, the effect of these determinants (return on assets, financial leverage, dividend payment, cash flow volatility and market to book ratios) on cash holdings was examined. Influence of other determinants used in extant literature designated control variables in this instance was also investigated. Ex-post-facto research approach via quantitative panel methodology was employed to ascertain the effect of the predictors on corporate cash holdings. Data were collated from the audited annual reports of forty-one (41) firms for the thirteen year period: 2006-2018. Diagnostic tests confirmed the consistency and suitability of the Fixed Effects (FE) panel regression models. In other words, data were analyzed by means of Prais-Winsten Regression Correlated Panels Corrected Standard Errors (PCSEs) . Findings indicate the existence of a significant positive influence of cash flow volatility, net working capital, market to book ratio on corporate cash holdings, but a significant negative effect of dividend payment and return on assets on cash and cash equivalents. These results imply that stockpiling cash and liquid assets substitutes decreases the value of the firm through market capitalization as they move in opposite direction. Further, highly levered firms may be operating sub-optimally given that the lingering local recession has made borrowing too expensive if not impossible. The study surmised that cash holdings of Nigerian manufacturing firms is significantly influenced by cash flow dynamics and availability of both liquid asset substitutes, market value of the firm and profitability. The study recommends that these firms maintain adequate cash budget and cash flow planning to ensure smooth running of operations, sufficient liquid and near liquid resources to cover maturing loans / debentures, and opt for an optimal liquidity – profitability trade-off at least in the short run given that it boosts the magnitude of both liquidity and profitability. Keywords: Financial Determinants, Cash Holding, Firm Size. DOI: 10.7176/EJBM/12-14-06 Publication date: May 31 st 2020

Trade-Off Between Liquidity and Profitability: An Empirical Study of Pharmaceutical Sector in the Republic of North Macedonia

Abstract The relationship between liquidity and profitability is one of the most interesting topics in the corporate finance research. Having in mind that the pharmaceutical industry is one of the most competitive sectors globally and that its substantial investments in research and development make this industry a key asset for a country’s economic well-being, this paper examines the liquidity-profitability trade off in pharmaceutical sector of RNM. The empirical research engages the secondary annual financial report data of the two pharmaceutical companies listed on Macedonian Stock Exchange (MSE) over the period from 2006-2016. Current ratio (CR), quick ratio (QR) and cash ratio (CAR) were used as measures of liquidity while return on assets (ROA) and return on equity (ROE) were used to measure profitability as a dependent variable. The statistical tests used to evaluate the effects of liquidity on profitability involved descriptive statistics, correlation and regression analysis. The findings suggest that there is no significant relationship between profitability and liquidity determinants of the listed North Macedonian pharmaceutical firms. Regarding practical implications, these findings can help managers overcome dilemmas with respect to the liquidity and profitability tradeoff. Furthermore, this study contributes to the existing research base in this field and represents one of the pioneer attempts in the case of RNM. The results gained from the research are very important for companies themselves, but they can also serve as a starting point for future research to eliminate financial and other corporate issues related to the relationship between profitability and liquidity determinants.

Understanding Carbamate Formation Reaction Thermochemistry of Amino Acids as Solvents for Postcombustion CO2 Capture.

The carbamate stability constant for a data set of 10 amino acids, having potential for being postcombustion CO2 capture (PCC) solvents, has been calculated using various implicit and explicit solvation shell models. This work also includes an extensive study of gas-phase free energy and enthalpy for the amino acid carbamate formation reaction with the Hartree Fock method, density functional methods [B3LYP/6-311++G(d,p)], and composite methods (G3MP2B3, G3MP2, CBS-QB3, and G4MP2). Ideal PCC solvent properties require finding a profitable tradeoff between various thermodynamic and system optimization parameters. Benchmark gaseous-phase and solution-phase thermodynamic properties given in this work can help in making informed decisions when choosing promising PCC solvents. The temperature dependency of the carbamate stability constant of amino acids is predicted using PCM and SM8T implicit solvation models. PCC is a temperature swing absorption-desorption process, and the high-temperature sensitivity of the ln KcAmCOO- value is of vital importance in attaining cost-efficient processes.

Liquidity profitability trade-off: Evidence from medium enterprises

Research Question: This paper examines the impact of liquidity on the profitability of the Serbian polluting medium sized enterprises. Motivation: We study the impact of traditional liquidity indicators and indicators based on cash flow on the profitability. In domestic literature, a contribution in the field of financial stability analysis based on cash-flow is rare, consequently we use cash flow indicators as a liquidity measure. Focus of this paper is on the medium sized enterprises in Serbia being the major sources of environmental pollution. Medium-sized enterprises are the main drivers of economic growth. For improving environmental performance and applying technologies and processes that meet environmental requirements, it is necessary the liquidity and profitability improvement. The progress in the area of environmental protection is the relevant part of the accession process of Serbia to the EU. Idea: The idea of this paper was to empirically examine the liquidity profitability trade-off of selected enterprises. The research was conducted using return on assets as the dependent variable, and three liquidity ratios and three cash flow based indicators as independent variables. Data: The financial analysis is based on the sample of 48 polluting medium-sized enterprises for the period 2010-2015. The official financial statements were taken from the Serbian Business Registers Agency. The data are used on an annual basis. Tools: We tested the panel regression model of profitability with the total number of observations being 288. We estimated the unbalanced panel because our dataset had missing values. It is used the standard pooled OLS estimator. Before estimated panel regression model, we did stationarity and cointegration analysis of sample data. Findings: The results of our study show a significant impact of quick liquidity ratio, cash flow operating margin and cash flow investing margin on profitability measured by return on assets. However, there are no significant effects of current liquidity ratio, operating cash flow liquidity ratio and cash flow financing margin on profitability. The conclusions of our paper refer to the selected enterprises in the observed periods. Contribution: This paper contributes both to the literature concerning liquidity and profitability analysis, since we use cash flow indicators as a liquidity measure.

The Relationship between the Disappearing Use Value of Urban Space and Gentrification: "Is Gentrification a Profitable Trade-off?"

This paper investigates the lost use value of the city center within the framework of the property handover in Fikirtepe Regeneration Project and the gentrification process experienced by the old settlers. The paper aims to explain the nature of the change that takes place in the social structure of regeneration area and transforming of the city center’s use value into the exchange value associated with the changing of social structure. The paper also aims to express what this replacement mean for old settlers and to discuss if the gentrification is a profitable trade-off for them. The data obtained from the questionnaires and the in-depth interviews conducted with the old settlers of regeneration area and the investors who prefer to buy real estate from the new projects in the region, have been analyzed in order to identify the relationship between the lost use value of the city center and the old settlers’ perception regarding to the gentrification. The study demonstrates that: i) There is a socio-cultural change in the regeneration area. ii) The old settlers of gentrified area and also the investors, perceive gentrification as a process of obtaining financial gain iii) The use value of the center disappears as a result of this perception of gentrification. Briefly, the paper aims to show a relationship between the lost importance of use value in urban space and gentrification process. Keywords:: Urban Regeneration, Gentrification, Use Value, Exchange Value, Real Estate Economic Rents, Istanbul.

Working Capital Management in Micro Enterprise-A Case Study of Bharat Cashew Manufacturing Company

A well designed Working Capital Management decision or short term investment decision ensures proper liquidity and profitability trade-off in any business organization. In this paper, an attempt is made to examine working capital management in Bharat Cashew Manufacturing Company. This company is a Micro Enterprise belongs to Andhra Pradesh state of India. This enterprise is located in vetapalem, Prakasam District. Bharat Cashew Manufacturing Company was established in 1949. It is engaged in the business of purchase and sale of raw cashew nut and manufacturing of cashew kernel. This Micro Enterprise has been doing cashew exports since inception. In this paper, an attempt is made to analyze the structure and composition of the working capital during the period of study covering ten years from 2006–07 to 2015–16. Attempt is also made to assess the liquidity position of the organization, to examine gross working capital turnover, to study net working capital turnover and to examine the efficiency in utilization of various current assets. Chi-square test is used to test the hypotheses formed.

Supplier selection under risk of delivery failure: a decision-support model considering managers’ risk sensitivity

This paper studies the problem of supplier selection and order allocation in a retail supply chain (comprising suppliers, a central purchasing unit and outlets) under disruption risk. The final demand is deterministic. Suppliers are located in different geographic areas, and supplies are subject to a positive probability of disruption. Different capacity and failure probabilities for each supplier are considered. Our analysis focuses on the insurance versus profitability trade-off faced by a supply manager who buys from suppliers for the outlets. Instead of determining optimal decisions given an objective function and the risk sensitivity of the decision-maker, we use a mixed integer linear programming approach to provide decision-making support that shows a supply manager the ‘elasticity of (expected) losses versus (expected) profits’. Under this model, and depending on the profit-and-loss targets, a supply manager of known risk sensitivity (i.e. risk aversion and loss aversion) can make better decisions when choosing suppliers. Moreover, taking into account, the impact of the share of fixed costs that must be covered by the operation, we consider the net values of expected profit and loss. We discuss the potential influence of the level of the firm’s fixed costs on the supply strategy. In particular, we show how the minimum value of the gross margin needed for the strategy’s profitability affects that strategy. A numerical application is conducted to illustrate the contribution of our decision-making support mechanism, and several managerial insights are obtained.

A Study On The Impact Of The Working Capital Management On The Profitability Of The Leading Listed Automobile Companies In India (2006- 2012).

India’s strategic objective for the manufacturing sector in the next 15 years should be to bring about quantitative and qualitative change through a set of policies and plans. Therefore, the cost associated with the strategy of doing business is much higher in India. Hence to overcome the difficulty and meet the challenges of manufacturing sector in India, Industries are encouraged to attract more investments into the stream in order to minimize the risk of liquidity and to maximize profitability. The liquidity and profitability trade off can be tackled efficiently by improving and adopting effective working capital management strategies into the manufacturing sector. This study takes into consideration the top S&P CNX 500manufacturing firms within the geographical area of India. The automobile sector accounts for 7.1 per cent of the country's gross domestic product (GDP). Working capital management is an important function of financial management which helps in maintaining an optimal balance between each of the working capital components. Industries can reduce their financing costs or increase the funds available for expansion of projects by minimizing the amount of investment tied up in current assets. In a broad-spectrum, current assets are considered as one of the important component of total assets of a firm. The purpose of the research is to analyze whether working capital management can affect the company profitability of Automobile sector in India. Some Previous research might have studied the relation between working capital management and profitability, but those research failed to address the Sectorwise issues of working capital management. This study aims at fulfilling such gaps by considering the industry specific nature of working capital. This thesis will introduce the reader about diverse techniques used to measure working capital management. Previous studies in this area have used various methods to measure the effectiveness of working capital. This study has been framed to show how efficient working capital management impacts the corporate profitability of 10 leading listed automobile sector in Chennai (India). The main source of secondary data was collected through Government reports, official records, journals, books, websites of Internet and financial statements, such as income statements, balance sheets of S&P CNX top500 companies at NSE were collected for the period of 2006 – 2012 from CMIE Prowess Database.

WORKING CAPITAL MANAGEMENT - IT’S IMPACT ON LIQUIDITY AND PROFITABILITY - A STUDY OF COAL INDIA LTD

The present paper makes an attempt to give a conceptual insight on working capital management and assess its impact on liquidity and profitability of Coal India Ltd. The liquidity and profitability tradeoff has become an important aspect for all the organizations. The attempt also has been made to test the liquidity and profitability position. For this correlation and spearman’s rank method has been applied. The correlation and spearman’s ranking method indicates weak correlation and negative relationship between liquidity and profitability. The Motaal’s test has also been applied to test the liquidity performance. It indicates liquidity position of the firm has improved over the study period. The study covers five year data from 2010-11 to 2014-15. For the analysis ratios indicating working capital performance and some statistical techniques are employed.

Does Culture Affect Operating Performance in Private Equity Buyouts?

Using a dataset of 583 private equity (PE) leveraged buyouts (LBOs) from 14 European countries, we examine the moderating impact of national culture on the operating performance of PE portfolio companies. We argue that high performance orientation of a society positively affects operating performance development because it aligns incentives with PE sponsors who need to satisfy high return expectations in a short period of time. In our baseline estimates, we find that PE-backed firms outgrow their respective industries significantly in terms of total assets and employment post-LBO. A country’s performance orientation reinforces this effect: A one standard deviation increase in countries’ performance orientation is associated with an industry-adjusted rise of about 11% in total assets and more than 6% in employment over the course of four years, respectively. Independent of a country’s performance orientation, PE-backing does not meaningfully impact post-LBO profitability, which suggests a growth profitability tradeoff. We also test whether growth comes at the expense of higher leverage and thus higher risk, but cannot find a significantly higher debt burden in performance oriented societies. Thus, our findings indicate that portfolio firms in performance oriented societies grow faster but at similar risk as their peers in non-performance oriented societies.

Fuzzy random cost–profit tradeoff location model for a vehicle inspection station with regional constraints

Transportation facility and automotive service enterprise location is an interesting and important issue. In practice, such factors as customer demand, allocations, even locations of customers and facilities are usually changing, thus making facility location problematic with uncertainty. To account for it, some researchers have addressed stochastic/fuzzy models for locating an automotive service enterprise. However, probabilistic/fuzzy models are not suitable to describe all kinds of uncertainty, but only randomness or fuzziness. In fact, the uncertain environment of locating an automotive service enterprise is a mixed one with both randomness and fuzziness. To handle this issue in a practical manner, this work proposes fuzzy random tradeoff issues for it. Moreover, some regional constraints can greatly influence its location. By taking the vehicle inspection station as a typical example, this work presents new fuzzy random cost–profit tradeoff models of its location problem with regional constraints. A hybrid algorithm integrating fuzzy random simulation and genetic algorithms is adopted to solve the proposed models. Additionally, some risk factors have a great impact on decision making when faced with a location problem. This work thus conducts a risk performance analysis for locating an automotive service enterprise. Some numerical examples are given to illustrate the proposed models. © 2016 Institute of Electrical Engineers of Japan. Published by John Wiley &amp; Sons, Inc.

Are sustainable tourists a higher spending market?

Resistance to sustainability practices often stems from the industry's view that sustainable tourism requires a profitability tradeoff where the additional costs associated with sustainability do not pay off in increased economic returns, yet few studies have been attempted to prove or disprove this viewpoint. This study analyzed spending patterns and length of stay of visitors to Montana, USA to determine if strong geotravelers (higher sustainable behaviors) were different than those with less sustainable behaviors. Results found that total trip spending by strong geotravelers (US $1164) was significantly higher than the overall spending of both moderate (US $866) and minimal geotravelers (US $668). These findings suggest that sustainable travelers are a travel market to be reckoned with in the tourism marketing and business world. The combination of their pro-sustainable behavior and increased spending provides evidence of a market segment in which destinations can benefit.