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The working capital management on the firms' financial performance with the moderating effect of the effectiveness of management policies: evidence from manufacturing companies listed in Colombo Stock Exchange

The working capital management on the firms' financial performance with the moderating effect of... Few studies have found a moderating effect between working capital management and a firm's financial performance. Due to limited literature and contradictions, this study aims to emphasise the association between working capital management and a firm's financial performance with the moderating effect of management policies using evidence from manufacturing companies listed on the Colombo Stock Exchange from 2014 to 2018. According to Iqbal et al. (2014), 28 manufacturing companies were selected using convenience sampling. This study adopted the quantitative research methodology and used correlation and regression analysis. The results show that a firm's cash conversion cycle affects its return on assets and net profit margin. Effective management policies in terms of inventory age, collection period, and payment period strengthen the relationship between working capital management and firm's financial performance. This study will help financial analysts and managers achieve their goals. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png American Journal of Finance and Accounting Inderscience Publishers

The working capital management on the firms' financial performance with the moderating effect of the effectiveness of management policies: evidence from manufacturing companies listed in Colombo Stock Exchange

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Publisher
Inderscience Publishers
Copyright
Copyright © Inderscience Enterprises Ltd
ISSN
1752-7767
eISSN
1752-7775
DOI
10.1504/ajfa.2022.130375
Publisher site
See Article on Publisher Site

Abstract

Few studies have found a moderating effect between working capital management and a firm's financial performance. Due to limited literature and contradictions, this study aims to emphasise the association between working capital management and a firm's financial performance with the moderating effect of management policies using evidence from manufacturing companies listed on the Colombo Stock Exchange from 2014 to 2018. According to Iqbal et al. (2014), 28 manufacturing companies were selected using convenience sampling. This study adopted the quantitative research methodology and used correlation and regression analysis. The results show that a firm's cash conversion cycle affects its return on assets and net profit margin. Effective management policies in terms of inventory age, collection period, and payment period strengthen the relationship between working capital management and firm's financial performance. This study will help financial analysts and managers achieve their goals.

Journal

American Journal of Finance and AccountingInderscience Publishers

Published: Jan 1, 2022

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