...WORKING CAPITAL MANAGEMENT AND PROFITABILITY IN SUGAR INDUSTRY OF PAKISTAN Muhammad Ehsan Javaid Leghari PhD Management Sciences COMSATS Institute of Information Technology Islamabad, Pakistan Email:muhammadehsanjavaid@yahoo.com ABSTRACT Working capital management is necessary for profitability. In this study working capital management of sugar industry and its impact on profitability is checked from 2002 to 2012. Total observations are 308 while 28 companies listed at Karachi Stock Exchange are in sample. Correlation and pooled panel data regression analysis is performed. Results show that day’s inventory, cash conversion cycle, cash ratio, account receivable to sale ratio, short term investment ratio, secured short term obligation and fixed asset ratio are negatively affecting profitability of firm. Whereas quick ratio, days account receivable and working capital are positively affecting profitability. Key words: Return on Asset, Cash Conversion Cycle, Secured Short Term Obligations, Cash Ratio, Account Receivable to Sale INTRODUCTION In finance field two extensively examined areas are capital structure and working capital management. It is matter of great importance both for researchers and corporate individuals to figure out firm’s value and profitability. Working capital management has a direct impact on the firm profitability along with reducing the liquidity risk. Liquidity is one face of coin and profitability is other. It clarify that working capital management is directly...
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...WORKING CAPITAL MANAGEMENT AND PROFITABLITY OF LISTED MANUFACTURING COMPANIES IN GHANA Agyemang Badu Ebenezer Lecturer, Department of Business Administration Presbyterian University College, Ghana Michael Kwame Asiedu Lecturer, Department of Business Administration Presbyterian University College, Ghana ABSTRACT This study examines the effect of working capital management on the profitability of companies listed on the Ghana Stock Exchange. Secondary data from the Ghana Stock Exchange on manufacturing companies within the Accra metropolis was used to examine whether working capital management influence the profitability of manufacturing companies in the country. The study found out that, the major component of working capital management such as inventory days, account payable and cash conversion cycle have influence on the profitability of manufacturing companies. The study recommended that, manufacturing companies should adopt efficient and effective ways of efficiently managing these components of working capital management. KEY WORDS: Working capital management, profitability, net operating profit 1.1 INTRODUCTION Working Capital Management has become very important in financial management because of its effects on the firm’s profitability, risk and consequently its value. There are several important reasons why the management of working capital is important to both small and large organisations. (Smith, 1980). A well designed and implemented working capital management policy is...
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...from being part of SCM in either operational or strategic level of implementation. In the traditional way, companies just buy the raw material, process it to become final product and distribute it to the customers. At the strategic level of implementation, the focus is more toward fulfilling customer’s requirement and satisfaction. Supply chain management can help a company achieve the true return on investment of customer relationship management (CRM) systems, making it easier to see how well-managed and efficient supply chain operations have a significant bearing on the organization’s overall financial performance. One important benefit is that supply chain management reduces the time required for a new product or service to progress from the initial concept to its final delivery to the market. Indeed, a key objective of supply chain management is to bring new ideas to market faster, whether they are innovations from in-house or ideas gleaned from elsewhere that an enterprise needs to transform into deliverable products faster than its competitors. Because it is the gateway to the market for any business, supply chain management adds value to the time an organization spends developing new products and services. Indicators of an organization’s financial performance are already recognized as being the income statement and the balance sheet reports. The income statement measures profitability over...
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...Internal control, as its name implies, involves everything that controls risks to a business. With enterprise strategic management theory continuing to develop, the actual meaning of internal controls is of increasingly focused. “Internal controls are an important step to help safeguard assets against the unauthorized acquisition, use, or disposition.” Fabiano (2012) explains that “Internal controls can help minimize the risk of employee theft or fraud occurring in your organization.” While according to Thain (1969), who developed criteria for differentiating among small, medium and large firms, because small firms might face much more different kinds of problems than others, they would find that it would be difficult to implement the internal control procedures in their firms. This literature review sets out to explicate the significant impact of internal controls in small businesses in term of improving the efficiency of auditing. It would also take account of the extension of it, using internal controls to reduce employee theft in small businesses. It is clear in the literature that effective internal controls have contributed to small businesses to shorten the time spent on auditing, which would also provide a savings in audit fees. Different economists propose a similar attitude to the impact of internal controls on auditing. Hicks and Chenok (1957) put forward a theory to suggest auditors use internal control questionnaires to assist them to characterize a properly coordinated...
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...on the impact of fair value measurements on earnings management analysis Contents Abstract 1. Introduction 2. Background and hypothesis 3. Literature review 4、Methodology 5. Sample selection and description 6. The test on the earnings management universality 7. The Impact of the Fair Value Application on Earnings Management 7.1 Correlation Analysis of the Main Variables 7.2 The Empirical Test of Linear Regression Equation 8. Limitation 9. Summary References Appendix I . Appendix II . Abstract The impact of fair value standard application towards enterprise is far-reaching and important, mainly in measurement methods of the changes on assets and liabilities way. This shift of fair value measurement method helps business executives for some sort of motive or target to conduct earnings management, thereby artificially adjusted profits. The authors focus on the study of earnings management in the listed Corporation under the fair value model during the financial crisis. We investigate the correlation between the application of fair value accounting and earnings management for providing the policy basis to improve fair value accounting and standardizing corporate earnings management behavior. We collect the sample data by selecting the Chinese A-share listed companies, and use the modified Jones model as a tool to prove the listed companies in the existence of widespread earnings management behavior. Descriptive analysis and regression analysis...
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...An Assessment of Corporate Cash Management Practices Author(s): Lawrence J. Gitman, Edward A. Moses and I. Thomas White Source: Financial Management, Vol. 8, No. 1 (Spring, 1979), pp. 32-41 Published by: Wiley on behalf of the Financial Management Association International Stable URL: http://www.jstor.org/stable/3665408 Accessed: 26-04-2016 11:33 UTC Your use of the JSTOR archive indicates your acceptance of the Terms & Conditions of Use, available at http://about.jstor.org/terms JSTOR is a not-for-profit service that helps scholars, researchers, and students discover, use, and build upon a wide range of content in a trusted digital archive. We use information technology and tools to increase productivity and facilitate new forms of scholarship. For more information about JSTOR, please contact support@jstor.org. Financial Management Association International, Wiley are collaborating with JSTOR to digitize, preserve and extend access to Financial Management This content downloaded from 202.79.21.43 on Tue, 26 Apr 2016 11:33:11 UTC All use subject to http://about.jstor.org/terms An Assessment of Corporate Cash Management Practices Lawrence J. Gitman, Edward A. Moses, and I. Thomas White Lawrence J. Gitman and Edward A. Moses are Associate Professors of Finance in the College of Business Administration at the University of Tulsa. I. Thomas White is a mechanical engineer with Mobil Pipeline Company in Dallas, Texas. The cost of preparation, distribution, and other clerical...
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...is achieved through ratio analysis of two pharmaceutical (Beximco and Square pharmaceutical) companies in Bangladesh. The main data collection from the annual financial reports on Beximco and square pharmaceutical companies in 2007 to 2008.Different financial ratio are evaluated such liquidity ratios, asset management ratios, profitability ratios, market value ratios, debt management ratios and finally measure the best performance between two companies. The mathematical calculation was establish for ratio analysis between two companies from 2007-2008.It is most important factors for performance evaluation. The graphical analysis and comparisons are applies between two companies for measurement of all types of financial ratio analysis. Liquidity ratio is conveying the ability to repay short-term creditors and it total cash. It determines perform of short term creditor of both pharmaceutical companies under the three categories such as current ratio, quick ratio and cash ratio. Asset management ratio is measurement how to effectively a company to use and controls its assets. Its also quantify into seven categories for both pharmaceutical companies such as account receivable turnover, average collection period, inventory turnover, account payable turnover ,account payable turnover in days ,fixed asset turnover ,total asset turnover. Profitability ratio is evaluate how well a company is performing by analyzing and how...
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...is achieved through ratio analysis of two pharmaceutical (Beximco and Square pharmaceutical) companies in Bangladesh. The main data collection from the annual financial reports on Beximco and square pharmaceutical companies in 2007 to 2008.Different financial ratio are evaluated such liquidity ratios, asset management ratios, profitability ratios, market value ratios, debt management ratios and finally measure the best performance between two companies. The mathematical calculation was establish for ratio analysis between two companies from 2007-2008.It is most important factors for performance evaluation. The graphical analysis and comparisons are applies between two companies for measurement of all types of financial ratio analysis. Liquidity ratio is conveying the ability to repay short-term creditors and it total cash. It determines perform of short term creditor of both pharmaceutical companies under the three categories such as current ratio, quick ratio and cash ratio. Asset management ratio is measurement how to effectively a company to use and controls its assets. Its also quantify into seven categories for both pharmaceutical companies such as account receivable turnover, average collection period, inventory turnover, account payable turnover ,account payable turnover in days ,fixed asset turnover ,total asset turnover. Profitability ratio is evaluate how well a company is performing by analyzing and how...
Words: 12872 - Pages: 52
...is achieved through ratio analysis of two pharmaceutical (Beximco and Square pharmaceutical) companies in Bangladesh. The main data collection from the annual financial reports on Beximco and square pharmaceutical companies in 2007 to 2008.Different financial ratio are evaluated such liquidity ratios, asset management ratios, profitability ratios, market value ratios, debt management ratios and finally measure the best performance between two companies. The mathematical calculation was establish for ratio analysis between two companies from 2007-2008.It is most important factors for performance evaluation. The graphical analysis and comparisons are applies between two companies for measurement of all types of financial ratio analysis. Liquidity ratio is conveying the ability to repay short-term creditors and it total cash. It determines perform of short term creditor of both pharmaceutical companies under the three categories such as current ratio, quick ratio and cash ratio. Asset management ratio is measurement how to effectively a company to use and controls its assets. Its also quantify into seven categories for both pharmaceutical companies such as account receivable turnover, average collection period, inventory turnover, account payable turnover ,account payable turnover in days ,fixed asset turnover ,total asset turnover. Profitability ratio is evaluate how well a company is performing by analyzing and how...
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...International Review of Business Research Papers Vo.2 No. 2. October 2006, Pp. 45 -58 Trends in Working Capital Management and its Impact on Firms’ Performance: An Analysis of Mauritian Small Manufacturing Firms Kesseven Padachi* A well designed and implemented working capital management is expected to contribute positively to the creation of a firm’s value The purpose of this paper is to examine the trends in working capital management and its impact on firms’ performance. The trend in working capital needs and profitability of firms are examined to identify the causes for any significant differences between the industries. The dependent variable, return on total assets is used as a measure of profitability and the relation between working capital management and corporate profitability is investigated for a sample of 58 small manufacturing firms, using panel data analysis for the period 1998 – 2003. The regression results show that high investment in inventories and receivables is associated with lower profitability. The key variables used in the analysis are inventories days, accounts receivables days, accounts payable days and cash conversion cycle. A strong significant relationship between working capital management and profitability has been found in previous empirical work. An analysis of the liquidity, profitability and operational efficiency of the five industries shows significant changes and how best practices in the paper industry have contributed to performance...
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...CHAPTER 2 REVIEW OF RELATED LITERATURE AND STUDIES This chapter presents the pieces of literature and studies that were found relevant to the topic. An Integrated School Management System plays a great role in simplifying the task of employees at school and gratifying the needs of the customers and officials of the schools. There are different products from different companies that offered school management system to sustain the necessity and will handle jobs such as admission and marketing support, student information and enrollment system, student service management and student performance or the grading system. Foreign Literature Super Technologies Inc. is an innovative IT company which was established by Rehan Ahmed and Suzanne Bowen in Florida, USA. The company offered different software products for management services such as the school management system. According to the owner, a School Management System is a great on-line support that can help with the daily school management routines and also can save time and get a full control access with the school tasks. The main principle of the system is security – the security subsystem supports dividing users into several groups having its own set of rights for viewing and changing data. The systems’ highest reliability is based on transactions. Transactional system never allows data to be lost or corrupted because of accidents such as electricity failure and hardware malfunction and all the...
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...Management control systems rk assignment ME2028 Behavioral Management Control Andreas Torbiörnsson 09 How could each of the control problems at Leo´s Four-Plex Theater be solved with the use of Cultural control? Cultural control is a type of control that encourages mutual monitoring1 and it builds a lot upon group pressure. The main idea of cultural control is to get the employees to watch over each other and to create a culture that has certain things that you specifically do or don’t do. It aims to set up shared beliefs and norms in that company, rules of behaving that everyone abides by. The case of Leo’s Four-Plex Theater has a number of control problems that I can identify. They are as follows: Discrepancies in the cash counts of the ticket booths. Most likely caused by a lack of motivation that leads to employee theft and neglecting of duties. The employees working in the refreshment stand sometimes do not collect cash from customers or doesn’t register the sale on the cash register. This is also most likely caused by a lack of motivation, it can’t be lack of direction since they know what they should do and neither could it be a personal limitation since they know how to operate the machine and how to collect payment. The problem seems to be that they don’t know why they should collect the cash. Test counts reveal that the number of tickets sold or put into the stub box isn’t equal to the amount of customers entering and leaving the theater. This seemed...
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...KTH Homework assignment ME2028 Behavioral Management Control Andreas Torbiörnsson 09 How could each of the control problems at Leo´s Four-Plex Theater be solved with the use of Cultural control? Cultural control is a type of control that encourages mutual monitoring1 and it builds a lot upon group pressure. The main idea of cultural control is to get the employees to watch over each other and to create a culture that has certain things that you specifically do or don’t do. It aims to set up shared beliefs and norms in that company, rules of behaving that everyone abides by. The case of Leo’s Four-Plex Theater has a number of control problems that I can identify. They are as follows: Discrepancies in the cash counts of the ticket booths. Most likely caused by a lack of motivation that leads to employee theft and neglecting of duties. The employees working in the refreshment stand sometimes do not collect cash from customers or doesn’t register the sale on the cash register. This is also most likely caused by a lack of motivation, it can’t be lack of direction since they know what they should do and neither could it be a personal limitation since they know how to operate the machine and how to collect payment. The problem seems to be that they don’t know why they should collect the cash. Test counts reveal that the number of tickets sold or put into the stub box isn’t equal to the amount of customers entering and leaving the theater. This seemed to be caused by three...
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...European Journal of Economics, Finance and Administrative Sciences ISSN 1450-2275 Issue 11 (2008) © EuroJournals, Inc. 2008 http://www.eurojournalsn.com The Usefulness of Corporate Governance and Financial Ratios to Credit and Financial Analysts: Evidence from Bahrain Jasim Al-Ajmi Department of Economics and Finance, College of Business Administration University of Bahrain, Bahrain Tel: +973-39444284; Fax: +973-17449776 E-mail: jasimalajmi@gmail.com Abstract Financial ratios provide useful quantitative information to investors and analysts who want to evaluate the operations of a firm and analyze its position within its industry over time. The financial indicators that analysts use as basis for decisions are not necessarily all equally useful. This study attempts to determine the perceptions of credit and financial analysts working in financial institutions in Bahrain as to the usefulness of 71 financial ratios and 6 attributes of corporate governance named in a questionnaire. There are no significant differences between credit analysts and financial analysts with respect to 40 of the indicators. Credit analysts consider the quick ratio the most useful ratio, followed by the non-recurrent ratio. Financial analysts consider price-earnings the most useful ratio, followed by the market-to-book ratio. The quality of corporate governance practices is also considered important by financial analysts, but less important by credit analysts. These results should be of interest...
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...Graduate Research Paper: Mahle Group Debra S. Tacconi BUS 640: The Financial Environment Dr. Alfred Kahl June 01, 2015 Table of Contents Abstract ............................................................................................................................... 3 Introduction ......................................................................................................................... 4 Literature Review................................................................................................................ 4 Analysis............................................................................................................................... 5 Principle 1: Money has a time value ....................................................................... 5 Principle 2: There is a risk return trade off ............................................................. 7 Principle 3: Cash Flows are the Source of Value.................................................... 8 Principle 4: Market Prices Reflect Information .................................................... 10 Synthesis............................................................................................................................ 11 Principle 1: Money has a time value ..................................................................... 11 Principle 2: There is a risk return trade off........................................................... 11 Principle...
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