cash conversion approach
153803289
The impact of cash conversion cycle on firm profitability: An empirical study based on Swedish data
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.
Darush Yazdanfar Peter Ohman
55306116
The Analysis of Company Liquidity A Using Cash Conversion Cycle Application: Evidence from Taiwan
It is important to determine whether firms realize assets within a short period to settle liabilities when the debts are due. Most common indicators used to measure liquidity are the current and quick ratios. However, the cash conversion cycle period (CCC) may be a better approach. This study chooses two Taiwan companies in food industries: a listed company (Uni President) and a delisted company (Tsin Tsin) to compare performance based on liquidity indicators. We examine financial data of the two companies from 1996 to 2005 (Tsin Tsin was delisted in 2006) to calculate their current ratio, quick ratio and cash conversion cycles. The research results show that CCC indicators better reflect the company's actual short term debt paying ability and liquidity.
Li-Hua Lin Szu-Hsien Lin Yi-Min Lin Chun-Fan You
153751748
An Empirical Analysis of the Determinants of the Cash Conversion Cycle in Kenyan Listed Non Financial Firms
Purpose The purpose of this paper is to investigate whether non financial firms listed on the Nairobi Securities Exchange (NSE) exhibit a target cash conversion cycle (CCC) The study also examines the speed of adjustment to the target CCC and the factors that influence corporate decisions on the optimum length of the CCC. Design/methodology/approach Based on a sample of 33 publicly traded firms on the NSE for the period between 1993 and 2008, cross sectional and time series analyses were carried out on the data comprising 468 firm years. A target adjustment model was developed to examine the significant determinants of the CCC. Various regression approaches including ordinary least squares, fixed effects and two stage least squares estimation models were used in data analysis. Findings The results, which are robust for endogeneity, show that non financial firms listed on the NSE maintain a target CCC. Further analysis reveals that these firms adjust to the target CCC at a slower rate. The results s.
David Mutua Mathuva
153631928
Modifying the cash conversion cycle: revealing concealed advance payments
Purpose The cash conversion cycle (CCC) is widely used in the academic studies of working capital management and supply chain efficiency. The purpose of this paper is to introduce a modification of this measure that takes into account advance payments as a component of operational working capital. Design/methodology/approach A new measure, the modified cash conversion cycle (mCCC) is introduced and tested with empirical data of companies in Helsinki Stock Exchange. Findings The mCCC reveals the real efficiency of operational working capital in companies that receive advance payments to a remarkable extent. Research limitations/implications The mCCC can be used in empirical analysis in academic studies. In this paper, the empirical data are used only for testing the mCCC. The paper concerns received advance payments, but the mCCC can also be extended also to other components of operational working capital ignored by the traditional CCC. Practical implications The paper offers insights into the va.
Anna-Maria Talonpoika Sari Monto Miia Pirttila Timo Karri
197899427
Operational Performance of an Agile Supply Chain: A Cash to Cash Approach
In recent business history, operational innovation has a central role in the success stories of businesses like Dell, Toyota and Wal Mart, and firms are on their way to make the supply chains more agile. The cash conversion cycle is also playing key role in determining the supply chain performance. Therefore, the main objective of the current study is to examine the impact of agile supply chain on the supply chain operational performance of manufacturing firms operating in Indonesia. In addition to that we have also examined the direct and indirect impact of cash conversion cycle in the relationship between agile supply chain and supply chain operational performance. Of the current stud. The data is collected from the operation managers, production managers and finance managers of manufacturing firms listed in Indonesian Stock Exchange. The results of the study have shown a great deal of agreement with our proposed hypothesis. The study which is among pioneering studies on the issue will be helpful for policy makers and managers in understanding the role of agency theory in supply chain management.
Afghan Prawira Asep Anwar Omar Alaeddin
64356639
PENGARUH CASH CONVERSION CYCLE DAN WORKING CAPITAL TURNOVER TERHADAP RETURN ON ASSET PADA INDUSTRI BARANG KONSUMSI YANG TERDAFTAR DI BURSA EFEK INDONESIA
This study aimed to examine the effect of the Cash Conversion Cycle and Working Capital Turnover on Return on Assets At the Consumer Goods Industry Listed in Indonesia Stock Exchange (IDX) The method used in this research is the quantitative approach. Results showed variable cash conversion cycle (CCC) and working capital turnover (WCT) simultaneously have a significant effect on profitability (Return on Total Assets) Variabel cash conversion cycle (CCC) partially not have a significant impact on profitability (Return on Total Assets) but variable working capital turnover (WCT) partially have a significant impact on profitability (Return on Total Assets) consumer goods industry issuers listed on the Indonesia Stock Exchange during the period 2010 2014. Keyword Cash Conversion Cycle, Working Capital Turnover, Return on Assets
Mohammad Herli Hafidhah Hafidhah
148275024
A Forensic Linguistic Approach to Legal Disclosures: ERISA Cash Balance Conversion Cases and the Contextual Dynamics of Deception
1. Introduction. 2. The Cash Balance Conversion Controversy: Dying But Not Dead 3. Strengths and Limitations of Information Manipulation Theory and Grice's Maxims for Explicating Deceptive Communication in ERISA Disclosures 4. Amara v. CIGNA 5. Tomlinson v. El Paso Corporation 6. Comparing Experimental and Non Experimental Analyses of Text Comprehensibility and Deceptiveness: Perspectives on Admissibility 7. Disclosure, Obfuscation, and Deception: Are IMT's Gricean Maxims Helpful?
James F Stratman
167647186
The Relationship of Cash Conversion Cycle and Profitability of Firms: An Empirical Investigation of Pakistani Firms
Purpose The objective of the study is to examine empirically the impact of Cash conversion cycle on the performance of Pakistani manufacturing firms. Design/methodology/approach The study used the sample of 32 companies selected randomly from three manufacturing sectors i.e. chemical, automobiles and construction material for the period of five years ranging from 2006 to 2010. The correlation and regression analyses were used to examine the relationship of CCC with performance of the firms: Return on Assets (ROA) Return on Equity (ROE) and Operating Profit (EBIT) Findings The study examined the impact of different variables of cash conversion cycle on firm's performance. The study found that the average collection period of accounts receivables, inventory conversion period and Cash conversion cycle (CCC) have negative relationship with firm's performance. Originality/value Many of the studies on working capital management (WCM) are with reference to developed economies like USA but fewer are with reference to developing economies like Pakistan. This study will contribute to the literature by analyzing the impact of working capital management on the performance of manufacturing firm by validating the results of previous studies stated in the literature.
Sadia Majeed Muhammad Makki Saba Saleem Tariq Aziz
154472124
Cash Conversion Cycle and Firm's Performance of Japanese Firms
Purpose The purpose of this paper is to investigate the relation between a firm's cash conversion cycle and its profitability. Design/methodology/approach The relation between the firm's cash conversion cycle and its profitability is examined using dynamic panel data analysis for a sample of Japanese firms for the period from 1990 to 2004. The analysis is applied at the levels of the full sample and divisions of the sample by industry and by size. Findings A strong negative relation between the length of the firm's cash conversion cycle and its profitability is found in all of the authors' study samples except for consumer goods companies and services companies. Originality/value Traditional focus in corporate finance was on the long term financial decisions, particularly capital structure, dividends, and company valuation decisions. However, the recent trend in corporate finance is the focus on working capital management. Most of working capital management literature is based on the US experience. This study investigates the relation between the firm's cash conversion cycle and its profitability of Japanese firms where the organizational structure is totally different from that of the US firms; most of the Japanese firms are interconnected and related through corporate groups
Haitham Nobanee Modar Abdullatif Maryam Alhajjar
56508760
THE RELATIONSHIP BETWEEN ECONOMIC VALUE ADDED AND CASH CONVERSION CYCLE IN COMPANIES LISTED ON THE WSE
Economic Value Added (EVA) a profitability measure and a Cash Conversion Cycle a liquidity and profitability measure are presented in this article. These ratios represent the dynamic approach to management of companies. The relationship between them may be considered as an advanced approach to management in a current economy based on intangible assets and know how and capital allocated fast and efficient according to information common access.
Monika Bolek Marta Kacprzyk Rafal Wolski