Impact of working capital management on business profitability: Evidence from the Polish dairy industry

Gołaś, Zbigniew

doi:10.17221/335/2019-agricecon

Cited by 28 publications

(44 citation statements)

References 15 publications

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“…There seems to be great potential for improvement in this field for Czech firms, especially as other countries, such as France, Austria or Belgium, have even lower capital tie-up than Poland. This general importance of a low capital tie-up confirms the results of other studies (Katchova and Enlow 2013;Mijic and Jaksic 2017;Balezentis et al 2019;Gołaś 2020).…”

Section: Comparisonsupporting

confidence: 89%

“…Mishra et al (2012) analysed influences on net profit margin, asset turnover and financial leverage for US agricultural firms, which were derived from a decomposing DuPont model. Gołaś (2020) showed the profitability impact of working capital management for Polish dairy firms. Further, determinants of profitability have been subject to comparative analyses and benchmarking within the agricultural sector (Wilson et al 2005) and other businesses (Katchova and Enlow 2013).…”

Section: Earnings Before Interest and Taxes Rocementioning

confidence: 99%

“…In all cases, this causes differences in RoCE of less *, **P-value of the t-test < 0.05 and < 0.01 respectively, for a comparison of the driver variables with those of the benchmark; AT -Austria; BE -Belgium; CZ -Czechia; DE -Germany; ES -Spain; FR -France; IT -Italy; PL -Poland; PT -Portugal; SK -Slovakia; RoS -return on sales; ΔRoS SCR -difference in RoS caused by staff cost ratios; ΔRoS VAR -difference in RoS caused by value added ratios Source: Own calculations based on BACH database (2020) *, **P-value of the t-test < 0.05 and < 0.01 respectively, for a comparison of the driver variables with those of the benchmark; AT -Austria; BE -Belgium; CZ -Czechia; DE -Germany; ES -Spain; FR -France; IT -Italy; PL -Poland; PT -Portugal; SK -Slovakia; RoS -return on sales; RoCE -return on capital employed; ΔRoCE FAI -difference in RoCE caused by fixed assets intensities; ΔRoCE SCR -difference in RoCE caused by staff cost ratios; ΔRoCE VAR -difference in RoCE caused by value added ratios; ΔRoCE WCI -difference in RoCE caused by working capital intensities Source: Own calculations based on BACH database (2020) Table 6. Partial differences in the return on sales to the leading benchmark country (Czechia) (%) Gołaś (2020), where inventory management played a dominant role. Some countries, such as Austria, Belgium and France, have advantages over Poland regarding the FAI.…”

Section: Comparisonmentioning

confidence: 99%

See 2 more Smart Citations

European benchmarking of determinants of profitability for companies with accrual accounting in the agricultural sector

Beyer¹,

Hinke²

2020

AGR ECON-CZECH

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In this study, differences in common measures of profitability, such as return on sales, return on capital employed and return on equity, are analysed in agricultural firms with accrual accounting in 10 European countries. The resulting differences in profitability are broken down using an additive decomposition method, which addresses the quantified impact of several affecting factors. This approach is based on a ratio system, which follows the principles of the DuPont identity. According to the general intention of benchmarking, the leading country within the sample for each measure of profitability provides the relevant reference point, representing best practice. This approach provides insight into the specific comparative strengths and weaknesses of the agribusinesses in the countries within the sample and indicates useful starting points for effective improvements. In addition to the value-creating operations, this involves, in particular, labour productivity, the efficient use of fixed assets and the degree of debt financing.

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Section: Comparisonsupporting

confidence: 89%

Section: Earnings Before Interest and Taxes Rocementioning

confidence: 99%

Section: Comparisonmentioning

confidence: 99%

See 1 more Smart Citation

European benchmarking of determinants of profitability for companies with accrual accounting in the agricultural sector

Beyer¹,

Hinke²

2020

AGR ECON-CZECH

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“…Regarding the relationship between working capital management and corporate profitability, although there are quite a few studies that have been published, the results of this relationship are still controversial. Most studies find that the opposite relationship between WCM and profitability or the volatility (increase, decrease) of CCC significantly affects the profitability of a company (Shin and Soenen, 1998;Song, Liu, & Chen, 2012;Vahid, Elham, Mohsen, & Mohammadreza, 2012;Aregbeyen, 2013;Tran, 2015;Lima, Martins, & Brandão, 2015;Jamalinesari & Soheili, 2015;Kasiran, Mohamad, & Chin, 2016;Le, Ho, Le, & Le, 2017;Botoc & Anton, 2017;Ndumia & Omagwa, 2019;Oladipupo, Adekanbi, & Oluwadare, 2019;Yusuf, 2019;Gołaś, 2020). Shin and Soenen (1998) studied at 58,985 firms over the period [1975][1976][1977][1978][1979][1980][1981][1982][1983][1984][1985][1986][1987][1988][1989][1990][1991][1992][1993][1994] and concluded that there is a significant relationship between the length of a firm's net trade cycle (NTC) and its profitability.…”

Section: Literature Reviewmentioning

confidence: 99%

Effect of Working Capital Management on the Profitability of Steel Companies on Vietnam Stock Exchanges

PHAM¹,

Nguyễn²,

Nguyen³

2020

JAFEB

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This study examines the influence of working capital management (WCM) factors on the profitability of steel companies listed on the Stock Exchange of Vietnam. Data was collected from audited financial statements of companies for a period of 10 years, from 2010 to 2019. The number of samples eligible for research is 20 out of 26 companies, which is equivalent to 76.9%. With the help of dedicated software Stata version 14, the impact determination of WCM (through 8 independent variables: DIO, DPO, DSO, CCC, SIZ, CR, LEV, GRO) to the firm's profitability (through the dependent variable) is performed through multivariate regression models. Research results from companies in the steel industry in Vietnam during this period indicate that WCM has a strong impact on the profitability of businesses. Among 8 factors affecting the profitability of steel enterprises, factors DPO, DIO, DSO, CR, SIZ, GRO have a positive impact, boosting profitability; 2 factors CCC and LEV have a negative impact on profitability; in which, the effect of CCC is negligible. This conclusion is almost in contrast to many previously published studies due to the specifics of the industry as well as the different stages of economic development associated with the economic management policies of the State.

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“…The same had shown that cash management has an insignificant effect on financial performance; most business owners are incompetent in cash management. Gołaś (2020) revealed the impact of working capital management on business profitability: Evidence from the Polish dairy industry. This paper's main objective was to examine the link between working capital management and ROA in milk processing companies.…”

Section: Literature Reviewmentioning

confidence: 99%

A Study on the Impact of Cash Management on the Financial Performance of the Listed Manufacturing Companies from Muscat Securities Market, Sultanate of Oman

Chintha¹,

Prasad²

2021

Int. j. bus. adm. stud

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Cash is a valuable yet scarce resource that all businesses have in limited quantity. Present research on cash management has focused on its connection with many important areas such as the effect on the liquidity of the business, its financial performance, bankruptcy, and the overall working capital itself. To validate the relationships between cash management and financial performance, 36 companies listed in Muscat Securities Market (MSM) had been chosen over time, starting from 2014 ending to 2019. For this, the study used cash management ratios, which were the Cash Ratio (CR), Operating Cash to Debt Ratio (OC-DR), and the financial performance ratios are Return on Assets (ROA), Return on Equity (ROE) and Net Profit Ratio (NPR). The CR has a statistically significant positive correlation with ROA of 0.176, ROE of 0.103 and NPR of 0.193 values. The OC-DR also has a statistically significant positive relationship with ROA (0.471), ROE (0.133), and NPR (0.422). The R-square value was 17.8%, where NPR is a dependent variable. When Return on Asset has been taken as a dependent variable, the R-square value was identified as 22.2%. But ROE has a limited impact on the independent variables with 2%. Overall, the main conclusion drawn is that cash management practices used by the Omani manufacturing firms are explaining a significant amount of the financial performance However other relevant factors such as the amount of manufacturing sales contracts received, the social development status of the business, impact of the financial crisis within the economy on the demand of the goods or commodities etc. may influence the cash management practices and draw a better conclusion. The findings can be helpful for policy makers in understanding the main factors that impact cash management and how these factors can be regulated.

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Impact of working capital management on business profitability: Evidence from the Polish dairy industry

Cited by 28 publications

References 15 publications

European benchmarking of determinants of profitability for companies with accrual accounting in the agricultural sector

European benchmarking of determinants of profitability for companies with accrual accounting in the agricultural sector

Effect of Working Capital Management on the Profitability of Steel Companies on Vietnam Stock Exchanges

A Study on the Impact of Cash Management on the Financial Performance of the Listed Manufacturing Companies from Muscat Securities Market, Sultanate of Oman

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