Relationship of Cash Management to Profitability of Cement Companies Listed on the Lima Stock Exchange

Abstract

Purpose: The general objective was to determine the relationship of cash on hand (COA) management on profitability in cement companies listed on the LSE from 2017 to 2021. Theoretical framework: The theoretical foundations found and cited in this work, allowed to know at a global level the behavior of cash management in companies and how it is related to profitability. Design/methodology/approach: A quantitative, longitudinal, basic, descriptive, and correlational methodology was used. Also, the financial positions of cement industry companies listed on the LSE for the period 2017-2021 are examined. Findings: The findings revealed that overall liquidity, acid test, working capital, net working capital over total assets, accounts receivable turnover, inventory turnover and fixed asset turnover are related to ROA and ROE. In contrast, the ratios that are least related to the business because they reached a value above 0.05 are working capital, net working capital over total assets, inventory turnover and accounts receivable turnover. Research, Practical & Social implications: cement companies were able to cope despite the significant challenges they faced before, during and after the pandemic; some needed additional capital, while others decided to obtain financial assistance. Originality/value: It is essential that the organization's available cash is used and distributed correctly, according to the real needs that the company must cover in a specific period to pay its debts in a timely manner.

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