Working capital management and firm’s valuation, profitability and risk

Le, Ben

doi:10.1108/ijmf-01-2018-0012

Cited by 87 publications

(152 citation statements)

References 38 publications

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“…Empresários devem fazer uma escolha entre seus objetivos de rentabilidade e controle de risco. A gestão do capital de giro é de grande importância em empresas com menos acesso a capital, mas também quando as empresas estão expandindo seus investimentos em períodos de recuperação econômica (Le, 2019). Kieschnick et al (2013) complementam que o net trade cycle não diz respeito apenas à gestão do dinheiro, mas também à gestão de capital de giro líquido e, portanto, gestão de contas a receber, estoque e uso de crédito comercial.…”

Section: Arcabouço Teórico 21 Gestão Do Capital De Girounclassified

“…A Tabela 6 mostra que o uso do desempenho medido pela ROA implica que existe um ponto ideal na gestão de estoque e desempenho, isto porque os resultados da regressão mostram a existência de uma relação estatística de U invertido entre rentabilidade, net trade cycle e seu quadrado. Portanto, esses resultados corroboram os achados de Baños-caballero et al (2014), Baños-Caballero et al (2019), Le (2019) Os resultados indicam que níveis mais baixos de estoque melhoram o desempenho por conta da possibilidade de as empresas aumentarem e melhorarem suas vendas e políticas de crédito como mostrado por Baños-caballero et al (2014), Baños-Caballero et al (2019), Le (2019) e Panda e Nanda (2018). O segundo momento em que um aumento no nível de estoque se relaciona com uma queda no desempenho mostra que maiores níveis de estoque resultam em baixo giro de estoque, políticas de crédito muito longas e custos de oportunidades perdidas.…”

Section: Verificação De Robustezunclassified

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Inventory management and performance of Brazilian firms

Cardoso¹,

Quirós²,

Souza³

et al. 2020

REPeC

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Objective: The inventory management faces a trade-off which affects firms in the relationship between whether maintaining high inventories and decreasing the probability of stock-outs or keeping inventory levels lower and applying the excess cash to other investments. Thus, this paper investigates the relationship between inventory management and performance. Method: The sample is comprised of non-financial Brazilian firms listed in the BM&FBovespa from 2010 to 2016, and due to inventory is not to be a relevant factor in the revenues of all the firms of the initial sample, it was applied a procedure to refine the sample through a simple linear regression to only comprise firms with a significant relationship between inventory and sales. To test the assumptions declared by the study, we used a quantitative approach based in a regression analysis. Results: The results indicate that the model which considers value added measurement of performance shows that there is no relationship between inventory and performance. However, a robustness check was done using the ROA to measure the performance and, in this scenario, there was a statistically inverted U-shaped relation between the profitability, the net trade cycle and its square. This means that a non-linear relationship between the variables were found, which follows the idea of an optimal level of inventory and performance. Contributions: To the best of the author’s knowledge, this is the first study that investigates an inflection point between inventory management and performance in Brazilian firms. The findings have relevant practical guidelines to the Brazilian firms and researchers in the analysis of the performance related to the net trade cycle, which it can be suggested that the Brazilian shareholders are not concerned about internal factors, as the inventory management, but if the firm is being managed profitable.

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Section: Arcabouço Teórico 21 Gestão Do Capital De Girounclassified

Section: Verificação De Robustezunclassified

Inventory management and performance of Brazilian firms

Cardoso¹,

Quirós²,

Souza³

et al. 2020

REPeC

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show abstract

“…According to the extant literature, the importance of WCM stems from many factors. Firstly, WCM affects the firms' profitability, risk, and shareholders' value (Smith, 1980;Le, 2019). Secondly, it is a primary concern during global crisis events.…”

Section: Introductionmentioning

confidence: 99%

The Implications of Debt Financing on Working Capital Management Efficiency: Evidence From Mena Emerging Markets

Alrahamneh

Chu

Hong

2020

IJIM

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This proposed study aims to examine how debt financing affects the working capital management (WCM) efficiency of firms in eight selected MENA countries over the period 2016-2020. This study discusses different theories of debt financing which include the trade-off theory, the pecking order theory, the market timing theory, and the agency theory (i.e., the agency theory of debt, equity, and free cash flow). Particularly, the study addresses how short-term debt, long-term debt, and total debt influence WCM efficiency. We hypothesize that there are positive relationships between the short-term debt (measured by the current ratio), the long-term debt (measured by the long-term debt to total assets ratio), and the total debt (measured by the total debt to total assets ratio) toward WCM (measured by cash conversion cycle). Firm’s specific characteristics such as the firm type, the firm size, firm’s sales growth, and tangibility were used as control variables for WCM. To achieve the study objectives, a sample of 718 non-financial listed companies on stock exchanges in countries of Bahrain, Egypt, Jordan, Kuwait, Oman, Qatar, Saudi Arabia, and UAE will be used over the period 2016-2020. Secondary quantitative data will be collected from the annual financial statements of firms. The multiple regression model will be used to test the study hypotheses. This proposed paper originally contributes to the extant literature in several ways. First, there were limited studies of WCM in the MENA context and the current study provided a new insight that has not been investigated before in the MENA region. Thus, it bridges the gap in the literature. However, the majority of extant WCM literature emphasized the relationship between efficient WCM and firms profitability. Moreover, this paper contributes to developing efficient WCM practices and strategies that improve the financial performance of listed companies in the MENA region

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“…The effective activity of development companies in the long-term perspective, ensuring high rates of their development and increasing competitiveness are largely determined by the professionalism of their investment activities [1,2]. The complex of issues related to the implementation of investment activities of companies requires deep knowledge of the theory and practice of investment decisionmaking [3].…”

Section: Introductionmentioning

confidence: 99%

Improving the Efficiency of the Investment Strategy of the Development Company

Chubarkina¹

2020

Proceedings of the International Scientific Conference "Far East Con" (ISCFEC 2020)

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In the implementation of capital construction projects, especially housing and commercial real estate, there is a need for a comprehensive study and analysis of the interaction of entities operating in the real estate market, as well as consideration of the place of development in this process. First, the external and internal environment of the investment project is analyzed, goals, priorities and criteria of the investment project are formed. Then the variants (alternatives) of investment are created, from which the best is chosen according to the criterion of maximizing the positive effect while minimizing the negative consequences. A system of management, monitoring and evaluation of the results of the implemented project, linked with all previous stages, is being created. This article presents an algorithm for the development of the investment strategy of the development company, which allows to clearly and effectively display the process of strategic planning in the development company: the sequence of stages, the flow of incoming and outgoing information, the performers and the methods used by these performers at a particular stage. The method of evaluating the effectiveness of the investment strategy of the development company on the basis of indicators of the effectiveness of the investment project, which allows to assess the planned efficiency before the strategy, and after the implementation of the strategy, the actual efficiency. The purpose of the study, reflected in this article, is to improve the efficiency of development companies by developing the basic strategy of their behavior in the real estate market.

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Working capital management and firm’s valuation, profitability and risk

Cited by 87 publications

References 38 publications

Inventory management and performance of Brazilian firms

Inventory management and performance of Brazilian firms

The Implications of Debt Financing on Working Capital Management Efficiency: Evidence From Mena Emerging Markets

Improving the Efficiency of the Investment Strategy of the Development Company

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