The Impact of Working Capital Financing Costs on the Efficiency of Trade Credit

2018 ◽  
Vol 28 (4) ◽  
pp. 878-889 ◽  
Author(s):  
Sripad K. Devalkar ◽  
Harish Krishnan
Keyword(s):  
Trade Credit ◽  
Working Capital ◽  
Financing Costs ◽  
Capital Financing ◽  
The Impact

Working Capital Financing, Firm Performance and Financial Flexibility: Evidence from Indian Hospitality Firms

2020 ◽  
pp. 097215092096137
Author(s):  
Nufazil Altaf
Keyword(s):  
Firm Performance ◽  
Method Of Moment ◽  
Working Capital ◽  
Short Term ◽  
Financial Flexibility ◽  
Negative Effect ◽  
Capital Financing ◽  
Hospitality Firms ◽  
Break Even Point ◽  
The Impact

This article examines the relationship between working capital financing and firm performance for a sample of 185 Indian hospitality firms. In addition, this study examines the impact of financial flexibility on working capital financing performance relationship for a period of 10 years. This study employs two-step generalized method of moment (GMM) techniques to arrive at results. Results of the study confirm the inverted U-shaped relationship between working capital financing and firm performance with optimal break-even point, beyond which short-term debt financing has a negative effect on performance at 0.54. In addition, we found that firms likely to be more financially flexible can finance a greater proportion of working capital using short-term debt, since break-even point turns out to be high for firms likely to be more financially flexible. The study is expected to extend the existing debate on working capital management by using the sample of Indian Hospitality firms for analysing the above-mentioned relationships.

scholarly journals An Analysis of Proposed Framework on Impact of Working Capital Management on the Profitability of Selected Manufacturing Companies Listed on the Nigerian Stock Exchange

2012 ◽  
Vol 4 (12) ◽  
pp. 730-736 ◽  
Author(s):  
Yusuf Aminu
Keyword(s):  
Inventory Management ◽  
Business Strategy ◽  
Trade Credit ◽  
Stock Exchange ◽  
Optimal Level ◽  
Manufacturing Companies ◽  
Capital Management ◽  
Working Capital ◽  
Working Capital Management ◽  
The Impact

Working capital management encompasses the overall idea of management of current assets and current liabilities of a business. Whether empirical or conceptual, the discussion have delineated working capital management as that part of business strategy which involves effective management of short term or current assets and liabilities to ensure optimal level and maximization of value. This paper aims to provide an analysis on the concept and propose framework that emphasizes on investigating the impact of management of working capital on the profitability of manufacturing companies listed on the Nigerian stock exchange. The paper proposes four dimensions (variables) as cash management levels, inventory management levels, receivable management, and the trade credit (Accounts payable) as measures of working capital management and the profitability of companies.

scholarly journals Working Capital, Financing Constraints and Firm Financial Performance in GCC Countries

2015 ◽  
Vol 7 (3) ◽  
pp. 59-64
Author(s):  
Sree Rama Murthy
Keyword(s):  
Financial Performance ◽  
Negative Impact ◽  
Positive Impact ◽  
Corporate Financial Performance ◽  
Working Capital ◽  
Return On Assets ◽  
Firm Financial Performance ◽  
Capital Financing ◽  
Gross Margins ◽  
The Impact

This paper looks at the impact of level of working capital on a firm’s financial performance of 153 large manufacturing firms operating in the six Gulf Cooperation Council Countries (GCC).Three hypotheses being tested in the paper are that working capital levels and inventory levels have a negative impact on corporate financial performance, have a positive impact on corporate financial performance, or that there is no empirically provable relationship between working capital and inventory and financial performance. A number of control variables including firm size, gross margins, and age of the firm are used in the regression analysis, as financial performance is not purely dependent on working capital and inventory levels. Pre-tax return on assets (ROA-profit before tax divided by total assets) is used to measure corporate financial performance. Performance is strongly influenced by levels of accounts receivables; however inventory levels and payables have no impact on performance.

Working Capital Financing Costs

2010 ◽  
pp. 127-133
Author(s):  
Lorenzo A. Preve ◽  
Virginia Sarria-Allende
Keyword(s):  
Working Capital ◽  
Financing Costs ◽  
Capital Financing

Working capital financing, firm performance and financial constraints

2019 ◽  
Vol 15 (4) ◽  
pp. 464-477 ◽  
Author(s):  
Nufazil Altaf ◽  
Farooq Ahmad
Keyword(s):  
Firm Performance ◽  
Financial Constraints ◽  
Emerging Market ◽  
Generalized Method Of Moments ◽  
Working Capital ◽  
Content Type ◽  
Capital Financing ◽  
Financing Performance ◽  
The Impact ◽  
The Relationship

Purpose The purpose of this paper is to examine the relationship between working capital financing and firm performance for a sample of 437 non-financial Indian companies. In addition, this study examines the impact of financial constraints on working capital financing–performance relationship. Design/methodology/approach The study is based on secondary financial data of 437 non-financial Indian companies obtained from Capitaline database, pertaining to a period of 10 years (2007–2016). This study employs two-step generalized method of moments techniques to arrive at results. Findings Results of the study confirm the inverted U-shape relationship between working capital financing and firm performance. In addition, the authors also found that the firms that are likely to be less financially constrained can finance greater proportion of working capital using short-term debt. Originality/value This study contributes to the scant existing literature by testing the impact of financial constraints on the relationship between working capital financing and firm performance, representing a typical emerging market in India.

scholarly journals ANALISIS DISHARMONISASI ANTARA ASSET FINANCING SERTA KEBIJAKAN PENGELOLAAN INDUSTRI PERTAMBANGAN TERHADAP PDRB DI PROVINSI LAMPUNG

2021 ◽  
Vol 8 (1) ◽  
pp. 1
Author(s):  
Suwarto Suwarto ◽  
Ardiansyah Japlani ◽  
Abi Melin Monaitaria
Keyword(s):  
Economic Growth ◽  
Random Effect ◽  
Mining Industry ◽  
Management Policy ◽  
Working Capital ◽  
Independent Variables ◽  
Capital Financing ◽  
Management Policies ◽  
Financing And Investment ◽  
The Impact

ABSTRAK Dalam rangka memanfaatkan kekayaan sumber daya alam tentunya diperlukan modal sebagai modal khususnya dari perbankan melalui asset financing. Penelitian ini bertujuan untuk mengetahui dan menganalisis. analisis disharmonisasi antara asset financing, kebijakan pengelolaan industri pertambangan terhadap PDRB di Lampung. Pembiayaan modal kerja dan pembiayaan investasi digunakan sebagai variabel independen. Sedangkan, dampak kebijakan kebijakan pengelolaan industri pertambangan menggunakan variabel dummy. Variabel independen dan variabel dummy tersebut dihubungkan dengan variabel dependen yaitu PDRB menggunakan metode regresi data panel dengan model Random Effect(REM) di Lampung. Hasil penelitian menunjukkan bahwa asset financing berpengaruh positif terhadap pertumbuhan ekonomi di Lampung, namun hanya pembiayaan modal kerja yang berpengaruh signifikan. Sementara itu, kebijakan kebijakan pengelolaan industri pertambangan terbukti memberikan pengaruh positif dan signifikan terhadap pertumbuhan ekonomi Lampung. Hasil penelitian ini diharapkan dapat bermanfaat bagi industri, pemerintah maupun regulator sebagai bahan evaluasi mengenai pengaruh asset financing dan kebijakan pengelolaan industri pertambangan terhadap PDRB provinsi Lampung. Kata kunci: Asset Financing, Kebijakan Pengelolaan Industri, PDRB, Lampung  ABSTRACT In order to utilize the wealth of natural resources, of course, capital is needed as capital, especially from banks through asset financing. This study aims to determine and analyze. analysis of disharmony between asset financing, mining industry management policies against GDP in Lampung. Working capital financing and investment financing are used as independent variables. Meanwhile, the impact of the mining industry management policy uses a dummy variable. The independent variables and dummy variables are associated with the dependent variable, namely GRDP using the panel data regression method with the Random Effect (REM) model in Lampung. The results showed that asset financing had a positive effect on economic growth in Lampung, but only working capital financing had a significant effect. Meanwhile, the mining industry management policy has proven to have a positive and significant impact on Lampung's economic growth. The results of this study are expected to be useful for industry, government and regulators as an evaluation of the effect of asset financing and mining industry management policies on PDRB in Lampung province. Keywords: Asset Financing, Industrial Management Policy, GRDP, Lampung

Economic downturns and working capital management practices: a qualitative enquiry

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Sunday Simon ◽  
Norfaiezah Sawandi ◽  
Satish Kumar ◽  
Magdi El-Bannany
Keyword(s):  
Interest Rates ◽  
Management Practices ◽  
Trade Credit ◽  
Capital Management ◽  
Working Capital ◽  
Working Capital Management ◽  
Content Type ◽  
Economic Downturns ◽  
Operational Activities ◽  
The Impact

Purpose This study aims to explore changes in working capital management (WCM) practices in response to economic downturns, especially during the coronavirus pandemic. Design/methodology/approach This study adopts an interpretative approach. This paper used semi-structured interviews with 2 finance directors and 13 top managers for data collection. This paper used thematic analysis for analysing the interview data. Findings The study findings suggest that the traditional ways of managing working capital may no longer be sufficient during a crisis. Instead, dynamic financing, trade credit policy and continuous staff training to develop new skills are alternative WCM practices to navigate the challenges of a crisis. Further, this paper finds that economic conditions, such as inflation rates, interest rates, exchange rates and government policy, negatively affect WCM. Practical implications The study findings highlight practical issues that may help firms meet their present and future financing needs, manage their day-to-day operational activities and enhance performance, both operational and financial. The study is beneficial for regulators in understanding a firm’s constraints during crises and respond appropriately. Originality/value This is the first study, to the best of the knowledge that uses a qualitative approach to investigate the impact of economic downturns on WCM practices of firms. Thus, this study offers new insights into the fundamentals of WCM practices during crises.

Industrial Power Rates in the Mid-Eighties

1976 ◽  
Vol 98 (4) ◽  
pp. 547-552
Author(s):  
R. M. Keith ◽  
G. R. Morris ◽  
B. Mangione
Keyword(s):  
Fossil Fuel ◽  
Electrical Power ◽  
Construction Costs ◽  
Plant Construction ◽  
Financing Costs ◽  
Rate Base ◽  
Capital Financing ◽  
Rate Design ◽  
The Impact ◽  
Fuel Costs

The full impact of higher cost fuel and plant construction costs have not been factored into today’s industrial electrical power rates. New power plant units committed in the late sixties and early seventies at sharply higher costs, higher financing charges and the phasing in of higher fossil fuel costs will create the need for sizeable rate increases over the next eight to ten years. This paper presents one technique for forecasting future industrial rates which takes into account the impact of the major parameters of fuel, cost of capital (financing) and the utility’s rate base on the development of customer class revenue. A sensitivity analysis is included which examines the effect of changes in fuel costs, new rate design proposals and financing costs. It is shown that these variations will add from 0.72 to 1.85 cents/kWh to the projected base rate of 2.85 cents/kWh in 1985. This is a total increase of over 94–154 percent compared to the actual rate of 1.85 cents/kWh in 1974.

scholarly journals Pengaruh Pembiayaan Berdasarkan Jenis Penggunaan Terhadap Non Performing Financing Pada Bank Umum Syariah (BUS) Dan Unit Usaha Syariah (UUS) Di Indonesia Periode Januari 2009 – Desember 2015

2017 ◽  
Vol 3 (12) ◽  
pp. 1006
Author(s):  
Diah Ayu Legowati ◽  
Ari Prasetyo
Keyword(s):  
Financial Services ◽  
Quantitative Methods ◽  
Secondary Data ◽  
Islamic Banking ◽  
Working Capital ◽  
Significance Level ◽  
Investment Financing ◽  
Capital Financing ◽  
Financing And Investment ◽  
The Impact

The purpose of this research was to analyze the impact of working capital financing, investment financing and consumption financing on Non Performing Financing of Islamic Banking Industry in Indonesia from January 2009 until December 2015. This research using a quantitative methods. The data used are the secondary data from Financial Services Authority official website. The analytical methods used in this research is the method of multiple linear regression with a significance level of 0,05. Based on the analysis, working capital financing and investment financing partially provide a significant impact on the ratio of non performing financing. Only consumption did not significantly affect the ratio of non performing financing. However, working capital financing, investment financing and consumption financing are simultaneously provide a significant impact on the ratio of non performing financing.

scholarly journals Trade credit and bank credit as alternative governance structures in South Africa: evidence from banking sector development

2017 ◽  
Vol 12 (3) ◽  
pp. 204-214
Author(s):  
Shame Mugova
Keyword(s):  
Corporate Governance ◽  
Banking Sector ◽  
Trade Credit ◽  
Good Governance ◽  
Bank Loan ◽  
Governance Structures ◽  
Working Capital ◽  
Banking Sector Development ◽  
Governance Practices ◽  
Capital Financing

Financial sector development is an influential force that outlines the financing and governance of firms in emerging economies. Suppliers and bankers represent alternative governance structures to a firm because of their trade credit and loan requirements, respectively. The continuous monitoring of investment by banks and suppliers impacts on corporate disclosure and practices. The study compares a sample of Johannesburg Stock Exchange (JSE) firms listed on the Socially Responsible Investment (SRI) index which measures corporate governance and those not listed on the index. A Generalized Least Squares (GLS) random effect regression of banking sector development and trade credit of firms listed on the JSE SRI and non-SRI listed firms was done to ascertain whether trade credit gives firms a preferred governance system and structure. The findings affirm that good corporate governance practices improve access to bank loans for working capital financing and good governance practices do not consequently result in more bank loan as a preferred governance structure for working capital financing compared to use of trade credit.

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