THE IMPACT OF CCC AND W.C ON THEPROFITABILITY OF KMI-30 INDEX

Samina Riaz

Abstract


Purpose-This research purpose is to investigate the impact of WC and CCC on prosperity of the companies, listed in KMI-30 Index.

Methodology/ Sample- For this research data was gathered from firm’s annual reports. Data of 30companies listed in KMI-30 Index was collected over the period of 2010 till 2014. Data was collected to check significance of ROE, Tobin’sQ, and ROA. To analyze these variables regression analysis was used to measure the impact on dependent variable through independent variables

Findings-The study concluded that cash conversion cycle and debt to assets ratio were most significant variable on the dependent variables i.e. ROA, Tobin’sQ and ROE.

Policy Implications-It was recommended to the companies of listed in the KMI-30 to maintain the CCC at their minimum level or in lines with the industry norms, so they can avoid the liquidity problem along with the reduce the shortfall of cash requirement which were needed to smoothly run the operations of the companies.

 Keywords: KMI-30, Tobin’s Q, ROA, ROE, WC, CCC


Full Text:

PDF

References


Abuzayed, B. (2012). Working capital management and firms’ performance in emerging markets: the case of Jordan. International Journal of Managerial Finance, 8 (2), 155-179.

Ademola, O. (2014). The Effect of Working Capital Management on Market Value of Quoted Food and Beverages Manufacturing Firms in Nigeria. International Journal of Business and Social Science, 8 (1), 168-177.

ALShubiri, F. N. (2011). The effect of working capital practices on risk management: Evidence from Jordan. Global Journal of Business Research, 5 (1), 39-54.

Al-Shubiri, F. (2013). The relationship between cash conversion cycle and financial characteristics of industrial sectors: an empirical study. Investment Management and Financial Innovations, 10 (4), 95-102.

Dong, H. (2010). The relationship between working capital management and profitability: a Vietnam case. International Research Journal of Finance and Economics, 5 (49), 59-67.

Jinadu, O. (2010). An Appraisal of the relationship between working capital and liquid assets of Nigerian Companies: A comparative study of ten selected companies. Journal of Research in National Development, 8 (1), 7-15.

Juan, P. (2007). Effects of working capital management on SME profitability. International Journal of Managerial Finance, 3 (2), 164-177.

K., K. (2002). A cost model of industrial maintenance for profitability analysis and benchmarking. International Journal of Production Economics, 79 (1), 15-31.

Marttonen, S. (2013). Profitable working capital management in industrial maintenance companies. Journal of Quality in Maintenance Engineering, 19 (4), 429-446.

Mutua, D. (2014). An empirical analysis of the determinants of the cash conversion cycle in Kenyan listed non-financial firms. Journal of Accounting in Emerging Economies, 4 (2), 175-196.

Nobanee, H. (2011). Cash conversion cycle and firm's performance of Japanese firms. Asian Review of Accounting, 19 (2), 147-156.

Pratap, H. (2014). Working capital management: a literature review and research agenda. Qualitative Research in Financial Markets, 6 (2), 173-197.

Sharma, A. (2011). Effect of working capital management on firm profitability: empirical evidence from India. Global Business Review, 12 (1), 159-173.

Tauringana, V. (2013). The relative importance of working capital management and its components to SME(s)' profitability. Journal of Small Business and Enterprise Development, 20 (3), 453-469.

Yazdanfar, D. (2014). The impact of cash conversion cycle on firm profitability : An empirical study based on Swedish data. International Journal of Managerial Finance, 10 (4), 442-452.


Refbacks

  • There are currently no refbacks.