2018
DOI: 10.1108/jfra-01-2017-0001
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The role of the AFA coefficient as a new criterion in the long-run liaison between corporate liquidity and bank credit

Abstract: Purpose This paper aims to focus on the absence of a direct criterion for the ideal level of net working capital (NWC) for which Acikgoz (2014) theoretically demonstrates that this NWC can be treated in a manner that allows the assessment of repayments. The study presents and discusses a new multiplier (i.e. the afa coefficient), defined as the ratio of cash equivalents ratio to NWC, measured as the percentage of short-term liabilities (Acikgoz, 2014). In other words, the study explores whether NWC could be an… Show more

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Cited by 2 publications
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“…The variables are as reported in *, **, *** significant at 10, 5 and 1% levels, respectively. See 2 for variables definitions…”
Section: Tablementioning
confidence: 99%
See 1 more Smart Citation
“…The variables are as reported in *, **, *** significant at 10, 5 and 1% levels, respectively. See 2 for variables definitions…”
Section: Tablementioning
confidence: 99%
“…By holding cash, companies avoid transaction costs associated with converting non-cash financial assets into cash and use cash for payments (Drobetz and Grüninger, 2007). Moreover, companies keep cash as a precaution to face any emergency conditions such as a sudden cash shortfall, a major depression, economic turmoil or uncertainty regarding their ability to obtain financing from external sources (Chireka and Fakoya, 2017; Acikgoz et al , 2018; Kusnadi, 2019; Xu et al , 2019). Keeping cash as an investment motive means being ready to seize any investment opportunity that appears before the company.…”
Section: Introductionmentioning
confidence: 99%