Investigate the relationship between working capital management and agency costs for firms listed in Tehran Stock Exchange

Size: px
Start display at page:

Download "Investigate the relationship between working capital management and agency costs for firms listed in Tehran Stock Exchange"

Transcription

1 : Investigate the relationship between working capital management and agency costs for firms listed in Tehran Stock Exchange Shahrzad Emrani, Dr. Hasan Hemati Department of Accounting, Science and Research Branch, Islamic Azad University, saveh, Iran PhD in Accounting and faculty member at University of Ghazvin univercity Abstract direct relationship is established The purpose of this study was to evaluate the effect of working capital management on the agency costs of listed companies in Tehran Stock Exchange The question is: Do different types of working capital management company representing the amount of money they have influence Which are the types of working capital management on behalf lesser cost effective? Agency costs may adversely affect the company's value In the present investigation agency costs as a function of the interaction between the company's growth opportunities and free cash flow is defined and the Tobin Q index, as a measure is used to measure growth opportunities For this purpose, the data of 127 firms listed in Tehran Stock Exchange during the period has been adopted. Research hypotheses using multiple regression analysis and correlation are discussed. Our findings suggest that the costs of debt collection agency, there is no statistically significant relationship between the payment of debts and expenses represent a significant Keywords: agency costs, working capital, receivables collection period, the debt 1. Introduction Working capital is defined as current assets and the company s net working capital, defined as current assets minus the current liabilities. As a measure used to measure the company's liquidity. No matter how much the company is high, the liquidity is high. With regard to the management of assets and liabilities is important in enterprises as well as the difficulties regarding financing them, the researchers sought to examine this issue.the overall goal of this research study researcher working capital management and its relationship with agency costs and reduce costs. 2. Problem Statement The main objective of this study was to investigate the impact of working capital management on behalf Costs of listed companies in Tehran Stock Exchange. Working capital management is one of the most important functions of financial management, which plays an important role in achieving the objectives, policies and achievements of the company When decisions, particularly in the areas of financial management and working capital management is adopted, its level is determined by the company. And theoretical study of financial management in relation to increasing the overall value of the company is done. Management of working capital, current assets and current liabilities are more involved in the organization and is considered part of capital budgeting in the form of short-term corporate planning fits. Currently one of the most important issues in financial management, working capital management discussion that focuses on the management of various assets and current liabilities For efficient and effective working capital management of a firm, predictable and secure cash required as a target In general, management of working capital means that cash, accounts receivable and inventory to be maintained at a level that can pay the bills for short-term and current liabilities are adequate movement. Using net working capital firm can afford the repayments of short-term debt can be predicted. 103

2 Costs represent the interests of owners and managers of non-alignment and the resulting separation of ownership and control are created. Problem is the urging delegates to take decisions that would maximize welfare owner (s) are. Relationship formation, agency, agency costs due to a conflict of interest arises between the parties.agency costs adversely affect the value of the firm is now looking to control and reduce such costs is. The purpose of this study is that the relationship between measures of working capital management agencies to determine what costs and find out which of these measures is to reduce the costs of company representatives as a result of increasing corporate value.the ultimate goal of any company is to be used in a way that increases its value. Therefore, in this study we are trying to find a way to introduce it to the company managers to assist them in reducing agency costs. In this study, we have investigated the relationship between working capital management and representation expenses. Relationship formation, agency, agency costs arising from conflicts of interest between the parties is created. Costs represent an adverse effect on the value of their companies and companies looking to control and reduce these costs. In this case, there are a few basic questions, including: The main research question is: Is there a relationship between working capital management and agency cost? 1. Is there a significant relationship between the company's collection agency costs? 2. Is there a significant relationship between the Company has paid the debt and agency cost? 3.The importance and necessity Agency costs have an adverse effect on firm value, if the market value of the firm is expected that costs will be reduced.there are different kinds of working capital management can reduce agency costs and negative effects on firm value may help. Agency costs will lead to increased value of the company, hence the choice of the impact of working capital Management Company on behalf of the costs to increase corporate value is the result shareholders and other stakeholders benefit. 4.Research hypotheses 4.1.The main hypothesis: There is a relationship between working capital management and representation expenses. 4.2.The first sub-hypothesis: the duration and the cost of debt collection company representing a significant relationship exists. 4.3.The second sub-hypothesis: the payment of debts and expenses of the company represented a significant relationship exists. 5. Background research Teruel and Solano (2006) during the years 2000 to 2005 to study the working capital management and profitability of small and medium companies have been Spanish. During this study, they found that working capital management policies of any company depends on the manager's part. Managers can adopt different policies in working capital levels, liquidity and profitability are affected and to determine the value of the company Rheman and Mohammad Naser (2007) in their study of the relationship between working capital management and profitability of the company's liquidity examined., In this study, the cash conversion cycle, cycle inventory, deposit the creditors, collection period, this ratio, net operating income, firm size, debt ratio and the ratio of financial assets, was used. Faris (2011) Working capital financing decision does not provide extensive details. This is perhaps due to the short-term investment and finance are considered. But the details of financial management decisions are extremely helpful. In this study, the relationship between working capital review conservative and strong 104

3 profitability. In a sample of 56 specimens in this study between 2004 and 2008 on the stock exchange is done. The results showed that the negative relationship between profitability and working capital as a conservative investment, and there are fiscal policy. Actually significant relationship between current assets and current liabilities on the company's financial and operational risks, there is no. Muhammad Safdar (2012), the relationship between working capital management and profitability of manufacturing companies in Pakistan was studied. The results show a strong negative relationship between the variables of working capital management and corporate profitability there. This means that as the cash conversion cycle increases it will lead to a reduction in the company's profitability. Elena Rshaly (2012 ) Factors affecting working capital management approach to research that examines the methodological approach in the study of 211 companies in the Athens Stock Exchange for a period of six years from 2005 to 2010 have been mentioned. The present study aims to investigate the effects of working capital management for the Greek enterprises through the examination of the profits (gross operating profit), the performance ( return on assets ) and market value (Q Tobin ). The results of the study showed a significant negative correlation between the variables of working capital and business performance there Seriana (2013) studied the relationship between working capital firms, private companies and the government to investigate the situation. Research findings show that private companies have the cash conversion cycle is slower than public companies.results show that the cash conversion cycle (negative) impact on profitability in a relatively strong private company than public companies. This shows that the efficiency of working capital for firms with access to external finance is bounded. Lee (2013), this study examines the relationship between state and liquidity management and shareholders can apply on behalf of the agency cost, it pays. The results of the research findings indicate that the positive relationship between government and agency fees apply when there is liquidity. In this regard, the rewards, control, monitoring, shareholder representation on the board is used for cost containment. Hassanpour (2009), to study the effect of working capital strategy focuses on stock returns. The overall strategy of working capital management is divided into three categories: 1. Conservative strategy, 2. bold strategy, 3. Moderate strategy.using the screening method 62 companies from 9 Sector 20 during the season will be reviewed. Results of hypothesis testing shows that the average yield different strategies differ significantly strategy and daring highest returns among a mong other strategies in the industry. Seyed Ali Mirtoni (2009), based on the separation of operational and corporate financial policy analysis, working capital management, manufacturing companies listed in Tehran Stock Exchange for the period 1383 to 1387 did.in this study the influence of different environmental factors and internal components of working capital included on the Company's net cash investment and the flow required studied. This study proposed the model of " separation of operational and financial policies of the company" to pursue a policy issue that cannot be told in bold or conservative Operating Profit Margin and the issues of the company's vision to the issues of financing can be different. Corporate financial policies may be bold but do not act boldly in the operational policy. The results of the study can be seen to some extent separate policies. Manufacturing companies have been aggressive fiscal policy in general and the operational policy is conservative The results of this study, which represents a net cash balance of corporate financial policy has been the lowest in And the working capital requirements of the operational policies indicate they are at their highest. eizadinia and Taki (2010 ) argue that the full development of the project and working capital management, can effectively contribute to the creation of corporate value, has. This paper aims to provide empirical evidence about the impact of working capital management on the viability of Iranian companies with a sample size is small or large. The data collected in this study, the financial statements of listed companies in Tehran Stock Exchange for the period 2002 to 2008 is taken. Dependent variable is the return on total assets as a measure of the ability to measure profitability is considered The regression results show a negative relationship between cash conversion cycle and return on assets has led to significant investment in inventory and accounts receivable may be leading to lower profitability. 6.Agency cost: Q*FCF: Growth opportunities measured by Tobin's Q. Q-Tobin: Is the sum of market value of equity and book value of total debt to total book value of total assets. 105

4 QI: Operating Profit Div: Dividends approved, D: Amortization expense of intangible and tangible fixed assets, T: Cost of Revenue I: Funding, TA: Total assets, FCF: Free cash flow. 7. Working Capital: Collection period: Average number of days that the company has received demands from customers. Payment of Debts: Average number of days the company will pay its debts. 8. Company Growth Company growth: the ratio of market value of equity to book value of equity is calculated. 9. Return Company The company's return on the stock is derived. 10. Company size Firm size is the logarithm of assets 11. Sample Companies that have not provided the information needed to calculate the variables of the study, the research community and ultimately the removal of a sample of 127 companies, and a knockout studies investigating the manner to a 6-year have been selected. Thus, the final sample size of 762 years - is now being used as a data fusion in hypothesis testing. (Listed in the Appendix are examples of companies). 12. Statistical model In this study, to analyze the raw data and convert it to the information needed to test the hypothesis of partial least-squares regression was used. These tests are performed by statistical software SPSS16 and panel data The first sub-hypothesis testing approach AGENCY i,t=β 0 +β 1 AR i,t +β 2 Ret i,t-1 +β 3 Cash i,t +β 4 Size i,t +β 5 GROW i,t + i,t The second sub-hypothesis testing approach AGENCY i,t=β 0 +β 1 AP i,t +β 2 Ret i,t-1 +β 3 Cash i,t +β 4 Size i,t +β 5 GROW i,t + i,t 106

5 13. Check the normality of the variable (s) associated Regression model to test the hypothesis, the variable costs as the dependent variable representation has been proposed. Model test research hypotheses based on regression equations and the normality of the dependent variable is based on the fundamental assumptions of normality of the residuals of the regression analysis as well as fashion. In this research the data normality test of Kolmogorov - Smirnov test was used. Statistical assumptions of the test are as follows. H 0 : the data distribution is normal. H 1 : the data distribution is not normal. The results of these tests are given in Table 1. Table 1: Test for normality of dependent variable Dependent variable k-s The test statistic d.f p-value Agency costs 0/ /095 According to the results in Table 4-2, the significance level of the test, Kolmogorov - Smirnov test for the dependent variable, rather than the experimental error (0.05 = α) and the hypothesis H 0 is accepted. In other words, the data on the dependent variable follows a normal distribution and a distribution close to normal as one of the basic assumptions of regression on this variable is accepted The first sub-hypothesis test results The first research hypothesis predicted that there is a relationship between the collection and representation expenses. To test this hypothesis, a regression model in which the costs of collection and represent a function of the control variables are used. The results of the regression model are given in Table 2. Table 2: Results of statistical analysis to test the first hypothesis AGENCY i,t=β 0 +β 1 AR i,t +β 2 Ret i,t-1 +β 3 Cash i,t +β 4 Size i,t +β 5 GROW i,t + i,t R 2 Adjusted D.W statistic statistic F p-value F Variable coefficient β Standardized t.statistic (P-value) constant AR Ret Cash Size GROW Statistical analysis of the validity of the regression model in the first part of Table 4-3. Coefficient of determination regression model is indicated that this model has managed 29.2 % of the sample firms represent changes in costs through independent and control variables to account for. Also, the results show that Watson statistic camera between 1.5 to 2.5 and therefore, there is a strong correlation between the errors of the regression model and its lack of correlation between the errors, as one of the basic assumptions of the regression model fitted, is accepted. Regression, analysis of variance (ANOVA), which based its decision on the F-statistic for the hypothesis test model was fitted in the first two columns of Table 4.3 are minor. Statistical assumptions of the F-statistic analysis is as follows H 0 : β i = 0 regression model is not significant. H 1 : β i 0 regression model is significant. 107

6 F-statistic for the model error level of less than significant level exam (0.05 = α), and hence the H0 hypothesis is rejected and a significant regression to estimate relationships between variables, is linear. Statistical analysis for each of the independent variables and control model in the second part of the first hypothesis are presented in Table 4-3. The estimated coefficient for the AR variable costs related to the debt collection agency shows, sort and a significance level of 0.946, which is higher than the 0.05 (test error) is. These findings suggest that contrary to the claims of the theory, there is no significant relationship between these variables. Regarding the control variables, the results indicate that the variable costs of liquidity and the growth rate of sales represent a significant direct relationship is established. In other words, agency costs in firms with higher liquidity and higher sales growth rate is higher than other companies. Based on the results presented in Table 4-3, the following regression model results can be expected.agency i,t= Cash i,t GROW i,t + i,t Overall, the results showed that the costs of debt collection agency, there is no statistically significant relationship. This finding is consistent with claims in the first hypothesis; the hypothesis is rejected at the 95% confidence level The second sub-hypothesis test results: The second hypothesis of the study predicted that there is a relationship between the agency costs of debt. To test this hypothesis, a regression model in which the agency costs of debt and function of control variables are used. The results of the regression model are given in Table 4-4 : Table 3- Results of statistical analysis to test the hypothesis AGENCY i,t=β 0 +β 1 AP i,t +β 2 Ret i,t-1 +β 3 Cash i,t +β 4 Size i,t +β 5 GROW i,t + i,t R 2 adjaste D.W statistic Statistic F pvalue Variable coefficient β Standardized Statistic t P-value Constant AP Ret Cash Size GROW Statistical analysis of the validity of the regression model in the first part of Table 4-4. Coefficient of determination regression model is indicated that this model has managed 2.31% of the sample firms represent changes in costs through independent and control variables to account for. Also, the results show that Watson statistic camera between 1.5 to 2.5 and therefore, there is a strong correlation between the errors of the regression model and its lack of correlation between the errors, as one of the basic assumptions of the regression model fitted, is accepted. F-statistic for the model error level of less than significant level exam (0.05 = α), and hence significant regression to estimate relationships between variables, is linear. The estimated coefficient for the variable representing the AP that the relationship of debt and the costs of the show, sort of 0.04 with a significance level of 0.023, which is less than 0.05 (test error) is. These findings suggest a significant correlation between the variables representing the cost of debt. In other words, companies that pay period longer have to bear higher agency costs. 108

7 Regarding the control variables, the results indicate that the variable costs of liquidity and the growth rate of sales represent a significant direct relationship is established. In other words, agency costs in firms with higher liquidity and higher sales growth rate is higher than other companies. Based on the results presented in Table 4-4, the following regression model results can be expected. AGENCY i,t= ap Cash i,t GROW i,t + i,t Overall, the results showed that the costs of debt payments represent a significant direct relationship is established. This finding is consistent with the claims raised in the second hypothesis and the hypothesis is rejected at the 95% confidence level. Table 4: Summary of results of testing hypotheses independent variable Significance Summary of hypotheses Results coefficient test There is a relationship between the Reject the hypothesis collection and representation expenses. There is a relationship between the agency costs of debt payments Acceptance of the hypothesis Overall, the findings show that the cost of working capital management agency relationship exists. Accordingly, the agency costs of debt payments, there is a significant inverse relationship. However, the relationship between inventories and the cash conversion cycle, direct and significant. 14. Conclusions: The first hypothesis tests and interprets the results The first hypothesis test results showed that the costs of debt collection agency, there is no statistically significant relationship. The results of theoretical investigations and claims are inconsistent with the first hypothesis (no relation). Also, the findings of the first research hypothesis, Fathi (2009) and Nubani and Alhajr (2010) is inconsistent. Because the researchers found that the collection of performance criteria there are forprofit entities. In this regard, Nubani and Alhajr (2010 ) suggested that the structure of the interest groups involved in working capital management, profit Units influences and contributes to the costs of adjustment are represented The second hypothesis tests and interprets the results The second hypothesis test results showed that the payment of debts and expenses represent a significant, direct relationship. The findings of the theoretical research and the second hypothesis are consistent with the claims. Also, the findings of this study, Fathi (1388) and Nobani and Alhajr (2010) is consistent. In this regard, it appears that the samples firms manage the debt payment period as a function of working capital management in dealing with creditors have responded.in fact, it can be stated that the effect of this on working capital management Profit entities by reducing financial restrictions and increasing their access to financial resources and summary of financial flexibility (Ding et al, 2011). The optimal management of working capital is the debt payment period longer be possible. This will benefit both investors and owners to be profitable. Firstly, the availability of financial resources to take advantage of opportunities to invest in projects with positive net present value increases. Consequently the Company's working capital efficient manner used to increase efficiency. Secondly, the existence of funds, profit units significantly reduces the cost of financing them. 15. Recommendations for future research 109

8 Examines the relationship between cash holdings and investment opportunities with delegates costs. Hypothesis One: There is a relationship between the residual cash cost to company representatives. Second hypothesis: the remaining costs of investment opportunities with representatives of the companies are related. The relationship between capital structure and financing costs represent costs of firms (Hypothesis One: There is a relationship between capital structure and corporate agency costs.second hypothesis: the financing costs represent costs associated companies there. Examine the reaction of investors to the company's cash holdings and the amount of working capital (Hypothesis I: Investors react to the level of corporate cash holdings. Second hypothesis: investors react to the amount of capital companies. References Abdul race Razloqi, Hope, 2007, "Evaluation of the correlation between working capital strategies and stock returns," Master's thesis, Faculty of Management, Tehran University. Abdul Rahman &Mohamed Nasr, (2007), Working capital Management and Profitability, International Review of Business Research Papers Anand,M.&A.,Gupta, Working capital performance of corporate India, Working Paper, SSRN Electronic Library Arrested, M., 2005, "Fundamentals of Financial Management", Volume I, Publications in new, second edition, Chapter V, pp Azar, A. and M. Momeni, 1998, "Application of Statistics and Management", Volume II, published by side. Baltagi, B. H. (2005), "Econometric Analysis Of Panel Data". John Wiley and Sons Inc, 3rd Edition, New York USA. Deloof. M. (2005), Dose Working Capital Management Affect Profitability of Belgian Firms?, Journal of Business,Finance and Accounting30, Denis, Diane K. and McConnell, John J.,(2003), "International CorporateGovernance",ECGI Finance Working Paper; and Tuck-JQFAContemporary Corporate Governance Issues II Conference.No.05/2003. Ding.S, Guariglia.A, and Knight.J(2011). Investment and financing constraints in China: does working capital management make a difference? Electronic copy available at: Dirt, G., 1996, "the dissertation research approach", publisher reflection, Eighth Edition, pp Fathi, S. (1388) examined the relationship between working capital management and firm financial performance, business review Issue 36, August, and Persian date Shahrivar 88, pp Fazzari, S. and B. Petersen (2010). Working capital and fixed investment: new evidence on financing constraints. The RAND Journal of Economics, 24, Fazzari. S. M. and B. Petersen,(2002), Working Capital and Fixed Inventory: New Evidence on Financing Constraints, Rand Journal of Economics 24, Garcia-Teruel, P. J., P. Martinez-Solano, J. P. Sanchez-Ballesta, (2008). Accruals Quality and Corporate Cash Holdings, Journal of Accounting and Finance, Vol 49, pp Guide Rodposhti, F., and A. Kiai, 2008, "Review and explain working capital management in firms listed in Tehran Stock Exchange", Journal of Accounting Research, No. 13 Haji, Z., 1384, "Journal of the audit." Look Publications, second edition, page 85 Jani E. Hoesli M. Bender A. w.d. (2004). Corporate Cash Holdings and Agency Conflicts, available at Jensen, M. C., and W.H. Meckling,(1976)," Theory of the Firm: Managerial Behavior, Agency Cost, and Ownership Structure", Journal of Financial Economics, 3: Jensen, M.C. (1998). Self-Interest, Altruism, Incentives of Agency Theory. Foundation of Organizational Strategy. Harvard University Press Khorram race, M. "Evaluation of operational working capital management and its influencing factors" Payanamh MS, Ferdowsi University of Mashhad in 1386 Loaniz,F.&A.Lazaridiz,(2004), The Relationship between Working Capital Management and Profitability Working Paper, SSRN Electronic Library. Mirtoni, A., 2009, "Analysis of working capital management, manufacturing companies," Master's thesis, Faculty of Management and Accounting, Allameh Tabatabai University Nobanee. H & AlHajjar.M,(2010) Working Capital Management, Operating Cash Flow and Corporate Performance.Department of Banking and Finance, The Hashemite University, P.O. Box , Zarqa, 13133, Noravesh, Iraj, Ali Ebrahimi Krdlrvjlal second Wafi, 1388 "Exploring the Relationship between Corporate Governance mechanisms and agency costs of listed companies in Tehran Stock Exchange " Master's thesis. Tehran University. Nvrvsh, I., G. Karami, 1388 "Exploring the Relationship between Corporate Governance mechanisms and agency costs of listed companies in Tehran Stock Exchange. Journal of Accounting Research. s Lawyer, H., Jacob, race, or, "The relationship between working capital management and profitability of listed companies in Tehran Stock Exchange blond ", Journal of Portfolio Management and Financial Engineering, Summer 2010, Issue II 110

9 Solano, M. &J,G Teruel, (2006), Effects of Working Capital Management on SME Profitability, Working Paper, SSRN Electronic Library. Technical Committee on Corporate Audit, Standards, International Journal of Accounting 88, pp

An Investigation into the relationship between working capital management and stock price. (Evidence of tehran stock exchange)

An Investigation into the relationship between working capital management and stock price. (Evidence of tehran stock exchange) www.ijrls.pharmascope.org An Investigation into the relationship between working capital management and stock price (Evidence of tehran stock exchange) Mohammad Ali Karchani* 1, Ibrahim Givaki 2 ISSN 2231-2935

More information

Impact of Working Capital Management on the Performance of the Firms Listed on the Tehran Stock Exchange

Impact of Working Capital Management on the Performance of the Firms Listed on the Tehran Stock Exchange Vol. 3, No.3, July 2013, pp. 352 364 ISSN: 2225-8329 2013 HRMARS www.hrmars.com Impact of Working Capital Management on the Performance of the Firms Listed on the Tehran Stock Exchange Mehdi Rezaie AHMADABADI

More information

www.engineerspress.com The Study of Factors Affecting Working Capital of Pharmaceutical Companies Accepted in Tehran Stock Exchange

www.engineerspress.com The Study of Factors Affecting Working Capital of Pharmaceutical Companies Accepted in Tehran Stock Exchange www.engineerspress.com ISSN: 2307-3071 Year: 2013 Volume: 01 Issue: 14 Pages: 66-77 The Study of Factors Affecting Working Capital of Pharmaceutical Companies Accepted in Tehran Stock Exchange ABSTRACT

More information

Investigating the Relationship between Working Capital Management and Net Trade Cycle, with the Profitability: Evidence from Tehran Stock Exchange

Investigating the Relationship between Working Capital Management and Net Trade Cycle, with the Profitability: Evidence from Tehran Stock Exchange Applied mathematics in Engineering, Management and Technology 2 (6) 2014:74-83 www.amiemt-journal.com Investigating the Relationship between Working Capital Management and Net Trade Cycle, with the Profitability:

More information

An Empirical Study of Association between Working Capital Management and Performance: Evidence from Tehran Stock Exchange

An Empirical Study of Association between Working Capital Management and Performance: Evidence from Tehran Stock Exchange Journal of Social and Development Sciences Vol. 3, No. 8, pp. 279-285, Aug 2012 (ISSN 2221-1152) An Empirical Study of Association between Working Capal Management and Performance: Evidence from Tehran

More information

To survey the effect of working capital policies (investing & financing) on profitability risk (evidence from Tehran stock exchange)

To survey the effect of working capital policies (investing & financing) on profitability risk (evidence from Tehran stock exchange) Journal of Investment and Management 2014; 3(1): 30-36 Published online March 10, 2014 (http://www.sciencepublishinggroup.com/j/jim) doi: 10.11648/j.jim.20140301.14 To survey the effect of working capital

More information

WORKING CAPITAL MANAGEMENT AND PROFITABILITY: EVIDENCE FROM PAKISTAN FIRMS

WORKING CAPITAL MANAGEMENT AND PROFITABILITY: EVIDENCE FROM PAKISTAN FIRMS Abstract WORKING CAPITAL MANAGEMENT AND PROFITABILITY: EVIDENCE FROM PAKISTAN FIRMS Ahsen Saghir Faculty Member of APCOMS, Rawalpindi Muhammad Ali Jinnah University, Islamabad Faisal Mehmood Hashmi Muhammad

More information

Impact of Working Capital Management on Profitability and Market Evaluation: Evidence from Tehran Stock Exchange

Impact of Working Capital Management on Profitability and Market Evaluation: Evidence from Tehran Stock Exchange International Journal of Business and Social Science Vol. 3 No. 0 [Special Issue May 202] Impact of Working Capital Management on Profitability and Market Evaluation: Evidence from Tehran Stock Exchange

More information

Investigating the Relationship between Working Capital Policy and Operational Risks in Listed Companies in Tehran Stock Exchange

Investigating the Relationship between Working Capital Policy and Operational Risks in Listed Companies in Tehran Stock Exchange ORIGINAL ARTICLE Received 18 Jun. 2014 Accepted 25 Aug. 2014 2014, Science-Line Publication www.science-line.com ISSN: 2322-4770 Journal of Educational and Management Studies J. Educ. Manage. Stud., 4(4):

More information

The Impact of Company Characteristics on Working Capital Management

The Impact of Company Characteristics on Working Capital Management Journal of Applied Finance & Banking, vol.2, no.1, 2012, 105-125 ISSN: 1792-6580 (print version), 1792-6599 (online) International Scientific Press, 2012 The Impact of Company Characteristics on Working

More information

RESEARCH IMPORTANCE AND NECESSITY

RESEARCH IMPORTANCE AND NECESSITY Studying the relationship between working capital management and profitability of listed companies in Tehran stock exchange Seyed Mohammad Alavinasab* 1 and Esmail Davoudi* Abstract Present study examines

More information

Examine the Relationship between Capital Structure, Free Cash and Operational Risks

Examine the Relationship between Capital Structure, Free Cash and Operational Risks International Research Journal of Management Sciences. Vol., 3 (7), 303-307, 2015 Available online at http://www.irjmsjournal.com ISSN 2147-964x 2015 Examine the Relationship between Capital Structure,

More information

Aien et al Int J Adv Stu Hum Soci Scie. 2013; 1(6):690-700

Aien et al Int J Adv Stu Hum Soci Scie. 2013; 1(6):690-700 Available online at http://www.ijashss.com International Journal of Advanced Studies in Humanities and Social Science Volume 1, Issue 6, 2013: 690-700 Original Research The influence of working capital

More information

Impact of working capital management on profitability ratios: evidence from Iran

Impact of working capital management on profitability ratios: evidence from Iran Impact of working capital management on profitability ratios: evidence from Iran Seyed Javad Habibzadeh Baygi Accounting Department, j.habibzade@gmail.com Islamic Azad University, Mashhad Branch, Department

More information

A Study on the Effect of Working Capital Management on the Profitability of Listed Companies in Tehran Stock Exchange

A Study on the Effect of Working Capital Management on the Profitability of Listed Companies in Tehran Stock Exchange 2013, World of Researches Publication Ac. J. Acco. Eco. Res. Vol. 2, Issue 4, 121-130, 2013 Academic Journal of Accounting and Economic Researches www.worldofresearches.com A Study on the Effect of Working

More information

The Relationship between Return on Equity and Investment Opportunities of the Firms Listed in Tehran Stock Exchange

The Relationship between Return on Equity and Investment Opportunities of the Firms Listed in Tehran Stock Exchange Research Journal of Recent Sciences ISSN 2277-252 Res.J.Recent Sci. The Relationship between Return on Equity and Investment Opportunities of the Firms Listed in Tehran Stock Exchange Davood Hassanpoor

More information

The Relationship Between Working Capital Management and Profitability of Companies Listed on the Johannesburg Stock Exchange

The Relationship Between Working Capital Management and Profitability of Companies Listed on the Johannesburg Stock Exchange Journal of Modern Accounting and Auditing, ISSN 1548-6583 August 212, Vol. 8, No. 8, 124-1213 D DAVID PUBLISHING The Relationship Between Working Capital Management and Profitability of Companies Listed

More information

Effective Working Capital Management Affects Profitability: Evidence from Asia

Effective Working Capital Management Affects Profitability: Evidence from Asia Effective Working Capital Management Affects Profitability: Evidence from Asia Hyder Ali Khawaja, Niaz Ahmed Bhutto 2, Falahuddin Butt 3 & Ghulam Abbas 4 Abstract The purpose of this study is to investigate

More information

The Study of Working Capital Strategies in Life Cycle of Companies

The Study of Working Capital Strategies in Life Cycle of Companies 2013, World of Researches Publication Ac. J. Acco. Eco. Res. Vol. 2, Issue 4, 77-88, 2013 Academic Journal of Accounting and Economic Researches www.worldofresearches.com The Study of Working Capital Strategies

More information

Working Capital Management and Corporate Profitability: Evidence from Iran

Working Capital Management and Corporate Profitability: Evidence from Iran World Applied Sciences Journal 12 (7): 1093-1099, 2011 ISSN 1818-4952 IDOSI Publications, 2011 Working Capital Management and Corporate Profitability: Evidence from Iran Mohammad Alipour Islamic Azad University,

More information

Journal of Business & Economics Research December, 2010 Volume 8, Number 12

Journal of Business & Economics Research December, 2010 Volume 8, Number 12 The Effect Of Working Capital Management On Firm s Profitability: Empirical Evidence From An Emerging Market Melita Stephanou Charitou, University of Nicosia, Cyprus Maria Elfani, University of Nicosia,

More information

Examine the Relationship between Financial Performance and Capital Structure, Free Cash and Operational Risks in Governmental Companies

Examine the Relationship between Financial Performance and Capital Structure, Free Cash and Operational Risks in Governmental Companies ORIGINAL ARTICLE Received 14 Feb. 2014 Accepted 25 Jul. 2014 2014, Science-Line Publication www.science-line.com ISSN: 2322-4770 Journal of Educational and Management Studies J. Educ. Manage. Stud., 4(3):

More information

J. Life Sci. Biomed. 5(1): 21-25, 2015. 2015, Scienceline Publication ISSN 2251-9939

J. Life Sci. Biomed. 5(1): 21-25, 2015. 2015, Scienceline Publication ISSN 2251-9939 ORIGINAL ARTICLE PII: S225199391500005-5 Received 25 Nov. 2014 Accepted 09 Dec. 2014 JLSB Journal of J. Life Sci. Biomed. 5(1): 21-25, 2015 2015, Scienceline Publication Life Science and Biomedicine ISSN

More information

A study of economic index effects on return on equity in iranian companies

A study of economic index effects on return on equity in iranian companies International Research Journal of Applied and Basic Sciences. Vol., 3 (8), 1691-1696, 2012 Available online at http:// www. irjabs.com ISSN 2251-838X 2012 A study of economic index effects on return on

More information

Studying the effects of using different strategies of working capital management on accruals quality of working capital

Studying the effects of using different strategies of working capital management on accruals quality of working capital Studying the effects of using different strategies of working capital management on accruals quality of working capital Mehdi Saleki 1,,Farhad Shahveisi* 3, Babak Jamshidinavid 4 1 Department of Accounting,

More information

Effect of working capital and financial decision making management on profitability of listed companies in Tehran s securities exchange

Effect of working capital and financial decision making management on profitability of listed companies in Tehran s securities exchange Effect of working capital and financial decision making management on profitability of listed companies in Tehran s securities exchange Masoomeh Shahnazi 2 (Shahnazi1393@gmail.com) Keyhan Azadi 1 (Ka.cpa2012yahoo.com)

More information

The Effect of Capital Structure on the Financial Performance of Small and Medium Enterprises in Thika Sub-County, Kenya

The Effect of Capital Structure on the Financial Performance of Small and Medium Enterprises in Thika Sub-County, Kenya International Journal of Humanities and Social Science Vol. 5, No. 1; January 2015 The Effect of Capital Structure on the Financial Performance of Small and Medium Enterprises in Thika Sub-County, Kenya

More information

IMPACT OF WORKING CAPITAL MANAGEMENT ON PROFITABILITY

IMPACT OF WORKING CAPITAL MANAGEMENT ON PROFITABILITY IMPACT OF WORKING CAPITAL MANAGEMENT ON PROFITABILITY Hina Agha, Mba, Mphil Bahria University Karachi Campus, Pakistan Abstract The main purpose of this study is to empirically test the impact of working

More information

Impact of working capital on firms profitability

Impact of working capital on firms profitability African Journal of Business Management Vol. 5(27), pp. 11005-11010, 9 November, 2011 Available online at http://www.academicjournals.org/ajbm DOI: 10.5897/AJBM11.326 ISSN 1993-8233 2011 Academic Journals

More information

The relationship of cash flow prediction and accruals on the return of book value to market value in food industry listed in Tehran Stock Exchange

The relationship of cash flow prediction and accruals on the return of book value to market value in food industry listed in Tehran Stock Exchange Journal of Scientific Research and Development 2 (6): 27-31, 2015 Available online at www.jsrad.org ISSN 1115-7569 2015 JSRAD The relationship of cash flow prediction and accruals on the return of book

More information

Working Capital, Financing Constraints and Firm Financial Performance in GCC Countries

Working Capital, Financing Constraints and Firm Financial Performance in GCC Countries Information Management and Business Review Vol. 7, No. 3, pp. 59-64, June 2015 (ISSN 2220-3796) Working Capital, Financing Constraints and Firm Financial Performance in GCC Countries Sree Rama Murthy Y

More information

Working Capital Management and Profitability: A Study of Selected listed manufacturing Companies in Nigerian Stock Exchange

Working Capital Management and Profitability: A Study of Selected listed manufacturing Companies in Nigerian Stock Exchange Working Capital Management and Profitability: A Study of Selected listed manufacturing Companies in Nigerian Stock Exchange Salman, A. Y. Department of Accountancy, Federal Polytechnic, Offa, Kwara State,

More information

The relationship between capital structure and firm performance. 3-Hamid Reza Ranjbar Jamal Abadi, Master of Accounting, Science and

The relationship between capital structure and firm performance. 3-Hamid Reza Ranjbar Jamal Abadi, Master of Accounting, Science and The relationship between capital structure and firm performance 1-Abolfazl Mahmoudi,Master of Accounting(Corresponding Author) 2-Ali Reza Yazdani,Master of student, accounting, Science and ResearchCenter,

More information

Folia Oeconomica Stetinensia DOI: 10.2478/v10031-012-0001-1 THE RELATION OF WORKING CAPITAL AND FIXED ASSETS: A STUDY

Folia Oeconomica Stetinensia DOI: 10.2478/v10031-012-0001-1 THE RELATION OF WORKING CAPITAL AND FIXED ASSETS: A STUDY Folia Oeconomica Stetinensia DOI: 10.2478/v10031-012-0001-1 THE RELATION OF WORKING CAPITAL AND FIXED ASSETS: A STUDY Mahdi Salehi, Ph.D. Ferdowsi University of Mashhad, Iran Faculty of Economics and Business

More information

IMPACT OF WORKING CAPITAL ON CORPORATE PERFORMANCE A CASE STUDY FROM CEMENT, CHEMICAL AND ENGINEERING SECTORS OF PAKISTAN

IMPACT OF WORKING CAPITAL ON CORPORATE PERFORMANCE A CASE STUDY FROM CEMENT, CHEMICAL AND ENGINEERING SECTORS OF PAKISTAN IMPACT OF WORKING CAPITAL ON CORPORATE PERFORMANCE A CASE STUDY FROM CEMENT, CHEMICAL AND ENGINEERING SECTORS OF PAKISTAN Naveed Ahmad Faculty of Management sciences, Indus international institute, D.

More information

International Review of Business Research Papers Vol.3 No.1. March 2007, Pp.279-300

International Review of Business Research Papers Vol.3 No.1. March 2007, Pp.279-300 International Review of Business Research Papers Vol.3 No.1. March 2007, Pp.279-300 Working Capital Management And Profitability Case Of Pakistani Firms Abdul Raheman* and Mohamed Nasr ** Working Capital

More information

THE RELATIONSHIP BETWEEN WORKING CAPITAL MANAGEMENT AND DIVIDEND PAYOUT RATIO OF FIRMS LISTED IN NAIROBI SECURITIES EXCHANGE

THE RELATIONSHIP BETWEEN WORKING CAPITAL MANAGEMENT AND DIVIDEND PAYOUT RATIO OF FIRMS LISTED IN NAIROBI SECURITIES EXCHANGE International Journal of Economics, Commerce and Management United Kingdom Vol. III, Issue 11, November 2015 http://ijecm.co.uk/ ISSN 2348 0386 THE RELATIONSHIP BETWEEN WORKING CAPITAL MANAGEMENT AND DIVIDEND

More information

Impact of Working Capital Management on Profitability of Micro and Small Enterprises in Ethiopia: The Case of Bahir Dar City Administration

Impact of Working Capital Management on Profitability of Micro and Small Enterprises in Ethiopia: The Case of Bahir Dar City Administration International Journal of Accounting and Taxation, Vol. 1 No. 1, December 2013 15 Impact of Working Capital Management on Profitability of Micro and Small Enterprises in Ethiopia: The Case of Bahir Dar

More information

Lina Warrad. Applied Science University, Amman, Jordan

Lina Warrad. Applied Science University, Amman, Jordan Journal of Modern Accounting and Auditing, March 2015, Vol. 11, No. 3, 168-174 doi: 10.17265/1548-6583/2015.03.006 D DAVID PUBLISHING The Effect of Net Working Capital on Jordanian Industrial and Energy

More information

RELATIONSHIP BETWEEN WORKING CAPITAL MANAGEMENT AND PROFITABILITY IN TURKEY INDUSTRIAL LISTED COMPANIES

RELATIONSHIP BETWEEN WORKING CAPITAL MANAGEMENT AND PROFITABILITY IN TURKEY INDUSTRIAL LISTED COMPANIES RELATIONSHIP BETWEEN WORKING CAPITAL MANAGEMENT AND PROFITABILITY IN TURKEY INDUSTRIAL LISTED COMPANIES Prof.Dr. Necdet SAGLAM Lecturer Aziz KAGITCI Assistant Prof.Dr. Semih BUYUKIPEKCI Abstract The present

More information

The Effect Of Working Capital Management On Profitability

The Effect Of Working Capital Management On Profitability The Effect Of Working Capital Management On Profitability To maintain efficient levels of components of working capital, current liabilities and current assets is a strategy of managerial level accounting

More information

WORKING CAPITAL MANAGEMENT, PROFITABILITY AND RISK ANALYSE OF COMPANIES LISTED ON THE WARSAW STOCK EXCHANGE

WORKING CAPITAL MANAGEMENT, PROFITABILITY AND RISK ANALYSE OF COMPANIES LISTED ON THE WARSAW STOCK EXCHANGE Financial Internet Quarterly e-finanse 2013 vol. 9 nr 3 Financial Internet Quarterly e-finanse 2013 vol. 9 nr 3 WORKING CAPITAL MANAGEMENT, PROFITABILITY AND RISK ANALYSE OF COMPANIES LISTED ON THE WARSAW

More information

Mahshid Asgharpour *1 and Dr. Vali Khodadai 2

Mahshid Asgharpour *1 and Dr. Vali Khodadai 2 The effect of financial constraints on the relationship between working capital management and financial performance of listed companies in Tehran Stock Exchange Mahshid Asgharpour *1 and Dr. Vali Khodadai

More information

The Determinants and the Value of Cash Holdings: Evidence. from French firms

The Determinants and the Value of Cash Holdings: Evidence. from French firms The Determinants and the Value of Cash Holdings: Evidence from French firms Khaoula SADDOUR Cahier de recherche n 2006-6 Abstract: This paper investigates the determinants of the cash holdings of French

More information

Examining the Effect of Discretionary Accrual's on Stock Liquidity of Companies Listed in TSE: A Comprehensive Index for Liquidity

Examining the Effect of Discretionary Accrual's on Stock Liquidity of Companies Listed in TSE: A Comprehensive Index for Liquidity 2013, TextRoad Publication ISSN 2090-4304 Journal of Basic and Applied Scientific Research www.textroad.com Examining the Effect of Discretionary Accrual's on Stock Liquidity of Companies Listed in TSE:

More information

Working Capital Management and Performance of Sabah s Public Listed Firms

Working Capital Management and Performance of Sabah s Public Listed Firms International Journal of Managerial Studies and Research (IJMSR) Volume 3, Issue 12, December 2015, PP 1-6 ISSN 2349-0330 (Print) & ISSN 2349-0349 (Online) www.arcjournals.org Working Capital Management

More information

Working Capital Management and Profitability: A Study on Textiles Industry

Working Capital Management and Profitability: A Study on Textiles Industry ASA University Review, Vol. 5 No. 1, January June, 2011 Working Capital Management and Profitability: A Study on Textiles Mohammad Morshedur Rahman * Abstract Textiles plays a vital role in the socio-economic

More information

The impact of working capital on the value of the company in light of differing size, growth, and debt

The impact of working capital on the value of the company in light of differing size, growth, and debt Peer-reviewed and Open access journal ISSN: 1804-1205 www.academicpublishingplatforms.com BEH - Volume 7 Issue 1 June 2012 pp. 27-41 The impact of working capital on the value of the company in light of

More information

Assessing Asymmetrical Relationship between Cash Flow Sensitivity and Operating Cash Flow

Assessing Asymmetrical Relationship between Cash Flow Sensitivity and Operating Cash Flow ORIGINAL ARTICLE Received 18 Dec. 2013 Accepted 11 Feb. 2014 2014, Science-Line Publication www.science-line.com ISSN: 2322-4770 Journal of Educational and Management Studies J. Educ. Manage. Stud.,4 (2):

More information

The Effect of Management Entrenchment on the Equity Capital in Iran

The Effect of Management Entrenchment on the Equity Capital in Iran Pak J Commer Soc Sci Pakistan Journal of Commerce and Social Sciences 2013, Vol. 7 (1), 19-26 The Effect of Management Entrenchment on the Equity Capital in Iran Somayeh Baratiyan Accounting Department,

More information

Effect of Working Capital Strategies on Stock Price Changes and Cash Value Added of Companies Listed in Tehran Stock Exchange

Effect of Working Capital Strategies on Stock Price Changes and Cash Value Added of Companies Listed in Tehran Stock Exchange Applied mathematics in Engineering, Management and Technology 3(1) 2015:762-770 www.amiemt-journal.com Effect of Working Capital Strategies on Stock Price Changes and Cash Value Added of Companies Listed

More information

Studying the Relationship between Liquidity Indices (traditional and modern) and the Profitability of Companies Listed in Tehran Stock Exchange

Studying the Relationship between Liquidity Indices (traditional and modern) and the Profitability of Companies Listed in Tehran Stock Exchange Studying the Relationship between Liquidity Indices (traditional and modern) and the Profitability of Companies Listed in Tehran Stock Exchange Farzaneh Nassirzadeh Ferdowsi University of Mashhad Faculty

More information

Capital Structure and Financial Performance: Evidence from Sugar Industry in Karachi Stock Exchange Pakistan

Capital Structure and Financial Performance: Evidence from Sugar Industry in Karachi Stock Exchange Pakistan Vol. 4, No.4, October 2014, pp. 272 279 E-ISSN: 2225-8329, P-ISSN: 2308-0337 2014 HRMARS www.hrmars.com Capital Structure and Financial Performance: Evidence from Sugar Industry in Karachi Stock Exchange

More information

An Investigation on Some Factors Affecting Accounting Accruals Persistence; Evidence From Tehran Stock Exchange (TSE)

An Investigation on Some Factors Affecting Accounting Accruals Persistence; Evidence From Tehran Stock Exchange (TSE) International Research Journal of Applied and Basic Sciences 2015 Available online at www.irjabs.com ISSN 2251-838X / Vol, 9 (10): 1744-1749 Science Explorer Publications An Investigation on Some Factors

More information

Cost of capital the measure to predict future returns on equity

Cost of capital the measure to predict future returns on equity Journal of Scientific Research and Development 2 (): 44-53, 205 Available online at www.jsrad.org ISSN 5-7569 205 JSRAD Cost of capital the measure to predict future returns on equity Azita Jahanshad *,

More information

Evaluating Effect of Free Float on Liquidity Increase, Depth and Efficiency of Companies Listed in Tehran Stock Exchange

Evaluating Effect of Free Float on Liquidity Increase, Depth and Efficiency of Companies Listed in Tehran Stock Exchange 2014 (4): 1-7 Evaluating Effect of Free Float on Liquidity Increase, Depth and Efficiency of Companies Listed in Tehran Stock Exchange Mohammad Reza Shahrasbi 1, Dr. Mehdi Taghavi 2, Dr. Kambiz Hozhabr

More information

Accounting: Cash Flow Statement

Accounting: Cash Flow Statement IOSR Journal of Business and Management (IOSR-JBM) e-issn: 2278-487X. Volume 7, Issue 4 (Jan. - Feb. 2013), PP 109-116 Accounting: Cash Flow Statement Aghdas Jafari Motlagh Masters Accounting Student Islamicazad

More information

STUDY THE RELATIONSHIP BETWEEN INVESTMENT OPPORTUNITIES AND EARNINGS STABILITY OF FIRMS IN TEHRAN SECURITIES EXCHANGE

STUDY THE RELATIONSHIP BETWEEN INVESTMENT OPPORTUNITIES AND EARNINGS STABILITY OF FIRMS IN TEHRAN SECURITIES EXCHANGE 2014 Vol. 4 (S4), pp. 24482455/Parvin and Mehrdad STUDY THE RELATIONSHIP BETWEEN INVESTMENT OPPORTUNITIES AND EARNINGS STABILITY OF FIRMS IN TEHRAN SECURITIES EXCHANGE Parvin Nafei 1, 2 and *Mehrdad Ghanbari

More information

Effect of Working Capital Management and Financial Leverage on Financial Performance of Philippine Firms

Effect of Working Capital Management and Financial Leverage on Financial Performance of Philippine Firms Effect of Working Capital Management and Financial Leverage on Financial Performance of Philippine Firms Corazon L. Magpayo This paper aims to determine the effect of working capital management policy

More information

ICAP GROUP S.A. FINANCIAL RATIOS EXPLANATION

ICAP GROUP S.A. FINANCIAL RATIOS EXPLANATION ICAP GROUP S.A. FINANCIAL RATIOS EXPLANATION OCTOBER 2006 Table of Contents 1. INTRODUCTION... 3 2. FINANCIAL RATIOS FOR COMPANIES (INDUSTRY - COMMERCE - SERVICES) 4 2.1 Profitability Ratios...4 2.2 Viability

More information

Studying the Relationship between Working Capital Management and Profitability at Tehran Stock Exchange: A Case Study of Food Industry

Studying the Relationship between Working Capital Management and Profitability at Tehran Stock Exchange: A Case Study of Food Industry Research Journal of Applied Sciences, Engineering and Technology 4(13): 1868-1874, 2012 ISSN: 2040-7467 Maxwell Scientific Organization, 2012 Submitted: December 27, 2011 Accepted: February 16, 2012 Published:

More information

AN ANALYSIS OF WORKING CAPITAL MANAGEMENT EFFICIENCY IN TELECOMMUNICATION EQUIPMENT INDUSTRY

AN ANALYSIS OF WORKING CAPITAL MANAGEMENT EFFICIENCY IN TELECOMMUNICATION EQUIPMENT INDUSTRY RIVIER ACADEMIC JOURNAL, VOLUME 3, NUMBER 2, FALL 2007 AN ANALYSIS OF WORKING CAPITAL MANAGEMENT EFFICIENCY IN TELECOMMUNICATION EQUIPMENT INDUSTRY Vedavinayagam Ganesan * Graduate Student, EMBA Program,

More information

Ingrid Andrews 1. Abstract

Ingrid Andrews 1. Abstract Are Working Capital Components and Strategies Significantly Related to Profitability? An Examination of Public Listed Conglomerates in Trinidad and Tobago: 2006-200 Ingrid Andrews Abstract An exploratory

More information

Asian Journal of Business and Management Sciences ISSN: 2047-2528 Vol. 2 No. 2 [51-63]

Asian Journal of Business and Management Sciences ISSN: 2047-2528 Vol. 2 No. 2 [51-63] DETERMINANTS OF CAPITAL STRUCTURE: (A Case Study of Machinery & Equipment Sector of Islamic Republic of Iran) Dr. Abdolmahdi Ansari Faculty of administrative Sciences and Economics, Department of Accounting,

More information

Firm characteristics. The current issue and full text archive of this journal is available at www.emeraldinsight.com/0307-4358.htm

Firm characteristics. The current issue and full text archive of this journal is available at www.emeraldinsight.com/0307-4358.htm The current issue and full text archive of this journal is available at www.emeraldinsight.com/0307-4358.htm How firm characteristics affect capital structure: an empirical study Nikolaos Eriotis National

More information

Working Capital Management and Profitability: A Sensitivity Analysis

Working Capital Management and Profitability: A Sensitivity Analysis Working Capital Management and Profitability: A Sensitivity Analysis Arunkumar ON & T Radha Ramanan Department of Mechanical Engineering, National Institute of Technology Calicut, Calicut 673601, Kerala,

More information

What Do Short-Term Liquidity Ratios Measure? What Is Working Capital? How Is the Current Ratio Calculated? How Is the Quick Ratio Calculated?

What Do Short-Term Liquidity Ratios Measure? What Is Working Capital? How Is the Current Ratio Calculated? How Is the Quick Ratio Calculated? What Do Short-Term Liquidity Ratios Measure? What Is Working Capital? HOCK international - 2004 1 HOCK international - 2004 2 How Is the Current Ratio Calculated? How Is the Quick Ratio Calculated? HOCK

More information

Influence of Aggressivenessand Conservativenessin Investing and Financing Policies on Performance of Industrial Firms in Kenya

Influence of Aggressivenessand Conservativenessin Investing and Financing Policies on Performance of Industrial Firms in Kenya IOSR Journal of Economics and Finance (IOSR-JEF) e-issn: 2321-5933, p-issn: 2321-5925.Volume 2, Issue 5 (Jan. 2014), PP 27-32 Influence of Aggressivenessand Conservativenessin Investing and Financing Policies

More information

RETURN ON CURRENT ASSETS, WORKING CAPITAL AND REQUIRED RATE OF RETURN ON EQUITY

RETURN ON CURRENT ASSETS, WORKING CAPITAL AND REQUIRED RATE OF RETURN ON EQUITY Financial Internet Quarterly e-finanse 2014, vol. 10/nr 2, p. 1-10 10.14636/1734-039X_10_2_005 RETURN ON CURRENT ASSETS, WORKING CAPITAL AND REQUIRED RATE OF RETURN ON EQUITY Monika Bolek* 1 Abstract The

More information

The effect of capital structure on the working capital and growth opportunity of the listed firms on Tehran Stock Exchange

The effect of capital structure on the working capital and growth opportunity of the listed firms on Tehran Stock Exchange Science Arena Publications Specialty Journal of Accounting and Economics Available online at www.sciarena.com 2015, Vol, 1 (1): 25-36 The effect of capital structure on the working capital and growth opportunity

More information

The Relationship between Working Capital Management and Profitability: Empirical Evidence from Morocco

The Relationship between Working Capital Management and Profitability: Empirical Evidence from Morocco Global Review of Accounting and Finance Vol. 6. No. 1. March 2015 Issue. Pp. 118 139 The Relationship between Working Capital Management and Profitability: Empirical Evidence from Morocco Samir Aguenaou*,

More information

Affects of Working Capital Management on Firm s Performance: Evidence from Turkey

Affects of Working Capital Management on Firm s Performance: Evidence from Turkey International Journal of Economics and Financial Issues Vol. 2, No. 4, 2012, pp.488-495 ISSN: 2146-4138 www.econjournals.com Affects of Working Capital Management on Firm s Performance: Evidence from Turkey

More information

WORKING CAPITAL MANAGEMENT AND PROFITABILITY IN SUGAR INDUSTRY OF PAKISTAN

WORKING CAPITAL MANAGEMENT AND PROFITABILITY IN SUGAR INDUSTRY OF PAKISTAN 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

More information

DETERMINANTS OF PROFITABILITY UNDERLINING THE WORKING CAPITAL MANAGEMENT AND COST STRUCTURE OF SRI LANKAN COMPANIES

DETERMINANTS OF PROFITABILITY UNDERLINING THE WORKING CAPITAL MANAGEMENT AND COST STRUCTURE OF SRI LANKAN COMPANIES DETERMINANTS OF PROFITABILITY UNDERLINING THE WORKING CAPITAL MANAGEMENT AND COST STRUCTURE OF SRI LANKAN COMPANIES Prabath Suranga Morawakage Graduate of B.B. Mgt (Finance) Special 356,Doranagoda,Bemmulla,Sri

More information

Working Capital Management and Profitability An Analysis of Firms of Textile Industry of Pakistan Malik Muhammad, Waseem Ullah Jan, & Kifayat Ullah

Working Capital Management and Profitability An Analysis of Firms of Textile Industry of Pakistan Malik Muhammad, Waseem Ullah Jan, & Kifayat Ullah Malik Muhammad, Waseem Ullah Jan, & Kifayat Ullah Abstract Working capital management plays an important role in success and failure of firm in business because of its effect on firm s profitability as

More information

Financial Statements and Ratios: Notes

Financial Statements and Ratios: Notes Financial Statements and Ratios: Notes 1. Uses of the income statement for evaluation Investors use the income statement to help judge their return on investment and creditors (lenders) use it to help

More information

its impact on profitability: A study of selected listed manufacturing companies in Sri Lanka

its impact on profitability: A study of selected listed manufacturing companies in Sri Lanka 76 its impact on profitability: A study of selected listed manufacturing companies in Sri Lanka Abstract: cance, which means that as the cash conversion cycle increases ROA decreases. Keywords: Working

More information

The Relationship between Working Capital Management and Firm Performance: Evidence from Iran

The Relationship between Working Capital Management and Firm Performance: Evidence from Iran International Journal of Humanities and Social Science Vol. 2 No. 2 [Special Issue January 2012] The Relationship between Working Capital Management and Firm Performance: Evidence from Iran Abstract Zahra

More information

THE EFFECT OF COMPONENTS OF A 4 PARTS MODEL OF CASH FLOW STATEMENT ON OPERATIONAL PERFORMANCE IN FIRMS ENLISTED IN TEHRAN STOCK EXCHANGE

THE EFFECT OF COMPONENTS OF A 4 PARTS MODEL OF CASH FLOW STATEMENT ON OPERATIONAL PERFORMANCE IN FIRMS ENLISTED IN TEHRAN STOCK EXCHANGE ISSN: 0976-2876 (Print) ISSN: 2250-0138(Online) THE EFFECT OF COMPONENTS OF A 4 PARTS MODEL OF CASH FLOW STATEMENT ON OPERATIONAL PERFORMANCE IN FIRMS ENLISTED IN TEHRAN STOCK EXCHANGE YADOLLAH TARIVERDI

More information

Return on Equity has three ratio components. The three ratios that make up Return on Equity are:

Return on Equity has three ratio components. The three ratios that make up Return on Equity are: Evaluating Financial Performance Chapter 1 Return on Equity Why Use Ratios? It has been said that you must measure what you expect to manage and accomplish. Without measurement, you have no reference to

More information

The Relationship between Knowledge Management Elements and Organizational Learning among Faculty Members of Islamic Azad University of Dezful

The Relationship between Knowledge Management Elements and Organizational Learning among Faculty Members of Islamic Azad University of Dezful International Journal On New Trends In Education And Literature Vol 1, No 6, Feb. 2015 http://www.ijnteljournal.com The Relationship between Knowledge Management Elements and Organizational Learning among

More information

Association Between Accounting Conservatism and Return on Investment in Listed Companies on Tehran Stock Exchange

Association Between Accounting Conservatism and Return on Investment in Listed Companies on Tehran Stock Exchange World Applied Sciences Journal 23 (9): 1140-1145, 2013 ISSN 1818-4952 IDOSI Publications, 2013 DOI: 10.5829/idosi.wasj.2013.23.09.879 Association Between Accounting Conservatism and Return on Investment

More information

RAPID REVIEW Chapter Content

RAPID REVIEW Chapter Content RAPID REVIEW BASIC ACCOUNTING EQUATION (Chapter 2) INVENTORY (Chapters 5 and 6) Basic Equation Assets Owner s Equity Expanded Owner s Owner s Assets Equation = Liabilities Capital Drawing Revenues Debit

More information

Evaluation of pricing strategies for life insurance with focus on bank interest rate changes

Evaluation of pricing strategies for life insurance with focus on bank interest rate changes Mohammad Saleh Torkestani (Iran), Elham Jamshidi Borujerdi (Iran) Evaluation of pricing strategies for life insurance with focus on bank interest rate changes Abstract From the 1980s, insurance activities

More information

THE EFFECT OF FINANCIAL PERFORMANCE FOLLOWING MERGERS AND ACQUISITIONS ON FIRM VALUE

THE EFFECT OF FINANCIAL PERFORMANCE FOLLOWING MERGERS AND ACQUISITIONS ON FIRM VALUE 1 THE EFFECT OF FINANCIAL PERFORMANCE FOLLOWING MERGERS AND ACQUISITIONS ON FIRM VALUE Edwin Yonathan, Universitas Indonesia Ancella A. Hermawan, Universitas Indonesia 2 THE EFFECT OF FINANCIAL PERFORMANCE

More information

Effects of Working Capital Management on the Profitability of Thai Listed Firms

Effects of Working Capital Management on the Profitability of Thai Listed Firms Effects of Working Capital Management on the Profitability of Thai Listed Firms Kulkanya Napompech Abstract Working capital is needed for day-to-day operations of a firm. The primary purpose of this research

More information

Impact of Working Capital Management on Firms Performance: Evidence from Non-Financial Institutions of KSE-30 index

Impact of Working Capital Management on Firms Performance: Evidence from Non-Financial Institutions of KSE-30 index INTERDISCIPLINARY JOURNAL OF CONTEMPORARY RESEARCH IN BUSINESS VOL 3, NO 5 Impact of Working Capital Management on Firms Performance: Evidence from Non-Financial Institutions of KSE-30 index Dr. Muhammad

More information

Paradigms Volume 6, Issue No. 1, 2012

Paradigms Volume 6, Issue No. 1, 2012 Paradigms: A Research Journal of Commerce, Economics and Social Sciences ISSN 1996-2800, 2012, Vol. 6, No. 1, pp. 100114-. Copyright 2012 Faculty of Commerce, University of Central Punjab All rights reserved.

More information

EFFECTS OF WORKING CAPITAL MANAGEMENT ON PROFITABILITY: THE CASE FOR SELECTED COMPANIES IN THE ISTANBUL STOCK EXCHANGE (2005-2008)

EFFECTS OF WORKING CAPITAL MANAGEMENT ON PROFITABILITY: THE CASE FOR SELECTED COMPANIES IN THE ISTANBUL STOCK EXCHANGE (2005-2008) EFFECTS OF WORKING CAPITAL MANAGEMENT ON PROFITABILITY: THE CASE FOR SELECTED COMPANIES IN THE ISTANBUL STOCK EXCHANGE (2005-2008) Hasan Agan KARADUMAN Yıldız Technical University Faculty of Economics

More information

FSA Note: Summary of Financial Ratio Calculations

FSA Note: Summary of Financial Ratio Calculations FSA Note: Summary of Financial Ratio Calculations This note contains a summary of the more common financial statement ratios. A few points should be noted: Calculations vary in practice; consistency and

More information

Effects of Working Capital Management and Liquidity: Evidence from the Cement Industry of Bangladesh

Effects of Working Capital Management and Liquidity: Evidence from the Cement Industry of Bangladesh Volume VI, Number-01, January-June, 2011 Effects of Working Capital Management and Liquidity: Evidence from the Cement Industry of Bangladesh SAYEDA TAHMINA QUAYYUM * ABSTRACT This paper is an attempt

More information

Working Capital Management and its affect on firm s profitability and liquidity: In Other food sector of (KSE) Karachi Stock Exchange

Working Capital Management and its affect on firm s profitability and liquidity: In Other food sector of (KSE) Karachi Stock Exchange Working Capital Management and its affect on firm s profitability and liquidity: In Other food sector of (KSE) Karachi Stock Exchange Muhammad Usama Student scholar Commerce Department, University of Sargodha

More information

Learning Objectives: Quick answer key: Question # Multiple Choice True/False. 14.1 Describe the important of accounting and financial information.

Learning Objectives: Quick answer key: Question # Multiple Choice True/False. 14.1 Describe the important of accounting and financial information. 0 Learning Objectives: 14.1 Describe the important of accounting and financial information. 14.2 Differentiate between managerial and financial accounting. 14.3 Identify the six steps of the accounting

More information

In this chapter, we build on the basic knowledge of how businesses

In this chapter, we build on the basic knowledge of how businesses 03-Seidman.qxd 5/15/04 11:52 AM Page 41 3 An Introduction to Business Financial Statements In this chapter, we build on the basic knowledge of how businesses are financed by looking at how firms organize

More information

The Nature of Accounting Systems

The Nature of Accounting Systems Basic Accounting & Budgeting February 4, 2009 The Nature of Accounting Systems Accounting is the process of recording, classifying, summarizing, reporting and interpreting information about the economic

More information

Working Capital Management Is It Really Affects the Profitability? Evidence from Pakistan

Working Capital Management Is It Really Affects the Profitability? Evidence from Pakistan Global Journal of Management and Business Research Volume 12 Issue 17 Version 1.0 Year 2012 Type: Double Blind Peer Reviewed International Research Journal Publisher: Global Journals Inc. (USA) Online

More information

Impact of Working Capital Management on Profitability: Evidence From Listed Companies in Sri Lanka T.A.N.R. Jayarathne

Impact of Working Capital Management on Profitability: Evidence From Listed Companies in Sri Lanka T.A.N.R. Jayarathne Reshaping Management and Economic Thinking through Integrating Eco-Friendly and Ethical Practices Proceedings of the 3 rd International Conference on Management and Economics 26-27 February 2014 Faculty

More information

www.engineerspress.com Investigating Effective Factors on Relevancy of Net Income

www.engineerspress.com Investigating Effective Factors on Relevancy of Net Income www.engineerspress.com ISSN: 2307-3071 Year: 2013 Volume: 01 Issue: 13 Pages: 13-22 Investigating Effective Factors on Relevancy of Net Income Ghodratollah Barzegar 1, Aliakbar Ramezani 2, Saeed Valinataj

More information

CHAPTER 2 ACCOUNTING STATEMENTS, TAXES, AND CASH FLOW

CHAPTER 2 ACCOUNTING STATEMENTS, TAXES, AND CASH FLOW CHAPTER 2 ACCOUNTING STATEMENTS, TAXES, AND CASH FLOW Answers to Concepts Review and Critical Thinking Questions 1. True. Every asset can be converted to cash at some price. However, when we are referring

More information