Is firms’ profitability affected by working capital management? A novel market-based evidence in Jordan

Soda, Mohammed Zakaria; Makhlouf, Mohammed Hassan; Oroud, Yazan; Omari, Rania Al

doi:10.1080/23311975.2022.2049671

Cited by 11 publications

(11 citation statements)

References 21 publications

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“…This research is in line with Ahmed et al (2018) that CCC has an insignificant effect on profitability. This finding does not support extant studies (Chang, 2018;Ren et al, 2019;Le, 2019;Fernández-López et al, 2020;Alarussi & Gao, 2021;Soda et al, 2022) which show negative significant relationship between CCC and profitability. Our empirical result indicates that the longer or shorter of CCC days does not enhance firm profitability, in terms of ROA.…”

Section: Discussioncontrasting

confidence: 96%

“…CCC is a crucial element that affects firms' profitability, and their relationships have been studied in many countries. For example, Portugal (Neves et al, 2021), China (Dalci, 2018;Ren et al, 2019;Alarussi & Gao, 2021), Malaysia (Wasiuzzaman, 2015), Thailand (Singhania & Mehta, 2017), Vietnam (Tran et al, 2017, Le, 2019, Jordan (Soda et al, 2022), and Ghana (Amponsah-Kwatiah & Asiamah, 2020). Some study multiple countries, such as Boțoc and Anton (2017) Tran et al (2017) explained that stable cash flow is significant to maintain a business; sufficient working capital will maximize profitability, while poor working capital management is one of the main reasons for business failure.…”

Section: And Profitabilitymentioning

confidence: 99%

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Working Capital Management and Leverage to Profitability: Case of Manufacturing Firms in Indonesia

Sany

Winata²,

Yasin³

2023

IJOBP

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This study aims to investigate whether Working Capital Management (WCM) and leverage affect firm profitability. Data concern was gathered from Bloomberg database terminal. Sample is manufacturing companies listed in Indonesian Stock Exchange (IDX) over the period of 2014 – 2020, which already established for some time. WCM is measured by using Cash Conversion Cycle (CCC), profitability is proxied with ROA while leverage is proxied by Debt-to-Equity. We find that the length of CCC days does not affect profitability, while the higher proportion of debt to equity will reduce profitability, on the other hand, the higher sales growth will enhance better firms’ profitability performance. Our findings contribute to understanding of the relationship of CCC and leverage on profitability in emerging markets.

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Section: Discussioncontrasting

confidence: 96%

Section: And Profitabilitymentioning

confidence: 99%

Working Capital Management and Leverage to Profitability: Case of Manufacturing Firms in Indonesia

Sany

Winata²,

Yasin³

2023

IJOBP

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“…This hinges upon the auditor's proficiency in identifying potential errors within financial reports. Such a task can only be achieved through the auditor's strict adherence to international audit standards (Soda et al, 2023). These international audit standards aim to define the methodologies governing the audit function, thereby serving as a benchmark for professional performance.…”

Section: Governance Of External Audit Operationsmentioning

confidence: 99%

“…External audit operations are thus executed with neutrality in mind. However, this does not necessarily preclude auditors from undertaking tasks other than auditing operations, albeit with a challenge in controlling these tasks (Soda et al, 2023).…”

Section: Governance Of External Audit Operationsmentioning

confidence: 99%

Accounting data governance and its influence on financial report quality: Insights from commercial banks

Alshehadeh,

Elrefae,

Yaseen

et al. 2024

J. Infras. Policy. Dev.

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This study aimed to measure the impact of implementing mechanisms of accounting data governance, represented by International Accounting Standards, internal auditing, external auditing, audit committees, disclosure and transparency, and performance evaluation, on the quality of financial reporting data for the commercial banks listed on the Amman Stock Exchange, totaling (15) banks. To achieve the objectives of this study, a descriptive-analytical approach was adopted by developing a questionnaire to collect the primary data measuring the study variables. The questionnaire was distributed to employees in the financial and control departments of these banks, with a total of (375) respondents from the total study population of (733) individuals. Appropriate statistical methods were used to analyze the data, test hypotheses, and the results of this study revealed a strong positive impact of five variables of accounting data governance mechanisms on achieving the quality of financial reporting data. These variables are ranked from highest to lowest in terms of the strength of impact and correlation with the quality of financial reports: disclosure and transparency, external auditing, International Accounting Standards, internal auditing, and audit committees. However, there was no impact of the performance evaluation governance variable on achieving the quality of financial reporting data. These results call on the management of commercial banks in the study to commit to the objective implementation of the requirements of accounting data governance mechanisms as stipulated by international professional assemblies.

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“…Effective management of working capital has been identified as a key strategy that can help minimize cost and optimize shareholders' equity [2]. According to [3], cited in [4], working capital management is an essential issue because it is a phenomenon that continues to be of material interest tofirms due to its great contributions to economic development. The prudent management of working capital guarantees that the financial resources of companies are completely adequate to meet their day-to-day operations so that they can attain high levels of performance [5,6].…”

Section: Introductionmentioning

confidence: 99%

Why Should We Pay Attention to Working Capital Management? A Case of Ghana

Baafi,

Sarkodie,

Duodu

et al. 2024

Businesses

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The paper examines the nexus between working capital management (WCM) and financial performance of listed non-financial firms in Ghana. An unbalanced panel data for the period 2008 to 2021 was used for the study. It is observed that the residual terms of the models were cross-sectionally independent and all the series were first-differenced stationary and cointegrated in the long term The elasticities of the predictors were explored via the Fully Modified Ordinary Least Squares (FMOLS) and the Dynamic Ordinary Least Squares (DOLS) techniques. The findings of the study indicate that WCM proxied by accounts receivable period (ACP), accounts payment period (APP), and inventory turnover period (ITP) have significant positive effect on firms’ financial performance measured by return on assets (ROA), return on equity (ROE), and return on capital employed (ROCE). This suggests that the working capital management practices of non-financial firms in Ghana improve their financial performance. Also, firm size and asset growth improve firm financial performance. On the causalities between the variables, bidirectional causalities between ACP, APP, ITP, size, and thecompanies’ ROA, ROE, and ROCE are disclosed. Finally, causality from growth to the ROA, ROE, and ROCE of the firms are unraveled. It is recommended that policy makers of non-financial firms in Ghana should not overlook WCM practices in their financial decisions, since ignoring them could seriously compromise the firms’ short- and long-term sustainability.

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Is firms’ profitability affected by working capital management? A novel market-based evidence in Jordan

Cited by 11 publications

References 21 publications

Working Capital Management and Leverage to Profitability: Case of Manufacturing Firms in Indonesia

Working Capital Management and Leverage to Profitability: Case of Manufacturing Firms in Indonesia

Accounting data governance and its influence on financial report quality: Insights from commercial banks

Why Should We Pay Attention to Working Capital Management? A Case of Ghana

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