Capital management
Author pradyum yadav
Roll 129
1. Effect of Working Capital Management on Profitability: A Case Study of Textile Companies
GARG MAHESH CHAND ET AL ( 2023) the article concludes that textile companies should focus on enhancing their investment in current assets, optimizing working capital management, and revising their credit policies to bolster profitability and overall financial performance. The research findings suggest that efficient working capital management can positively affect profitability. By optimizing the levels of current assets and liabilities, companies can reduce financing costs, improve cash flow, and enhance overall operational efficiency. For instance, reducing excessive inventory levels and shortening the accounts receivable collection period can free up cash and improve liquidity, ultimately boosting profitability.
2. Impact of Working Capital Management on firm
GARG MAHESH CHAND ET AL (2023)The study utilizes fixed effects and random effects models to obtain reliable results. The findings reveal a negative impact of WCM components on net profit ratio (NPR). Additionally, the study highlights the significance of trade finance in enhancing cash flow within organizations. Therefore, the article suggests that businesses should prioritize WCM, particularly the role of external finance, to ensure sustainable revenue and operational efficiency.Working capital management directly influences a firm’s cash flow. By reducing the cash conversion cycle (the time it takes to convert inventory and accounts receivable into cash), a firm can accelerate cash inflows and enhance its ability to fund operations, investments, and debt obligations.
3.Working Capital Efficiency and Firm Performance:
KOUSHIK NIKHIL CHAUHAN SWATI ET AL (2019) APD, shows a positive association with corporate performance, suggesting that longer accounts payable periods may contribute to improved firm performance in the Indian context. These findings contribute to the existing literature and highlight the importance of managing working capital efficiently for enhancing firm performance relationship between working capital efficiency and firm performance may vary across industries, company sizes, and economic conditions. Different industries may have specific working capital requirements, and the optimal level of working capital management may differ for each firm. Additionally, the impact of working capital management on firm performance should be considered alongside other factors such as industry dynamics, competitive positioning, and overall business strategy.
4.Earnings Management, Capital Ratios, and the Role of Securities Classification
ALALI FATIMA ANANDARAJA el at (2015) The study fills a gap in the existing literature by examining this specific aspect and contributes to a deeper understanding of how banks operate during financial crises and recessions. By considering the impact of security classification, the research sheds light on the constraints faced by banks in terms of earnings management and highlights the importance of accounting standards and measurement classifications in maintaining transparency and stability in the banking sector.
5.Efficiency and Quality of Retail Firm Capital Expenditure and Store Opening Forecasts
Cole, Cathy J.; Jones, Christop…et al( 2015) an efficient and quality-focused approach to capital expenditure and store opening forecasts enables a retail firm to optimize its investments, minimize risks, and achieve long-term success in the competitive retail market the efficiency and quality of capital expenditure and store opening forecasts significantly impact retail firms’ decision-making and operational performance. Accurate forecasts enable retail businesses to allocate resources effectively, minimize risks, and optimize their store network, ultimately leading to improved profitability and competitive advantage.
6. Impact of Market Imperfections on Cash Conversion Cycle Management in SMEs
Baños-Caballero, S…et al(2010)the significance of market imperfections in the management of Cash Conversion Cycle (CCC) in Small and Medium Enterprises (SMEs), which directly impact the amount of working capital invested. The findings of this research can be valuable for SMEs operating within a financial system that relies on banks SMEs often face difficulties in negotiating favorable credit terms with suppliers and managing payment delays from customers. Market imperfections, such as information asymmetry or limited bargaining power, can lead to less favorable payment terms. This results in longer payment cycles, impacting the cash conversion cycle. If SMEs must wait longer to receive payments from customers, they may struggle with cash flow shortages
7. Exploring the Relationship between Social Capital and Management Control Systems
Ströbele, Alexander; Wentges,…et al (2018)the study focused on clan control in SMEs and highlighted the successful application of clan control techniques in large organizations as well. The analysis primarily considered responses from members of the top management team (TMT) who have a broader perspective on social capital and management control systems. The study recognizes its limitations and suggests further research to gain a better understanding of how clan control works and the mechanisms it relies onon
8.Long-Term Capital Planning and Management
Jacobson, Willow S.; Sowa, Jes…et al (2015)The article discusses the importance of long-term capital planning and management in mitigating the negative effects of uncertainties such as fiscal stresses, political decisions, and unexpected revenue shortfalls on state budgets. The findings suggest that incorporating these practices can provide guidance to state budget practitioners and help alleviate fiscal stress, especially when operating under legal and political constraints. However, the study acknowledges a limitation in the use of panel data, as it does not capture the influence of time-invariant factors such as political values and institutions on spending. Future research is recommended to explore the static effects of these factors and gain a deeper understanding of the underlying policies driving state expenditure.
9.Assessing the Implementation of Strategic Human Capital Management in Municipalities
Srithongrung, Arwiphawee et al (2018) the transformation of the HR function from an administrative role to a strategic partner, employee advocate, and organizational change expert. Despite the recognized benefits of transitioning to a Strategic Human Capital Management (SHCM) approach in public personnel administration, there has been a lack of empirical evidence on the progress made in implementing SHCM practices. The research findings reveal that some progress has been made, but there is still significant variation in the extent to which municipalities have adopted SHCM practices. The article emphasizes the importance of human capital as a crucial competitive advantage for municipalities and highlights the positive trend of HR professionals being involved in strategic discussions. However, the results also indicate significant untapped opportunities for improvement in many municipalities
10.Effects of Enterprise Risk Management Adoption on Firms’ Cost of Capital
Berry-Stölzle, Tho…et al (2018) The article focuses on publicly traded U.S. insurance companies to avoid potential misleading correlations across different industries. It uses implied cost of capital models to calculate a firm’s cost of capital by aligning its market value of equity with discounted future cash flow estimates. The researchers then examine whether there is a significant decrease in the cost of capital following the adoption of Enterprise Risk Management (ERM) practices. They employ a two-equation treatment effects model to assess the impact of ERM on firms’ cost of capital. The findings indicate that ERM adoption is associated with a significant reduction in the cost of capital for the companies studied. These results are not only statistically significant but also economically meaningful, as they suggest that approximately one-quarter of the overall increase in firm value resulting from ERM adoption can be attributed to the lower cost of capital.
Conclusion
In conclusion, capital management is a vital aspect of financial management for businesses. It involves strategic decision-making to effectively allocate and optimize financial resources. By carefully managing capital structure, investments, working capital, and risks, companies can enhance their financial performance and sustainability. Key considerations in capital management include finding the right balance between debt and equity financing, evaluating and selecting investment opportunities, efficiently managing working capital, mitigating financial risks, determining dividend policies, maximizing capital efficiency, and maintaining strong relationships with capital providers. Effective capital management supports a company’s growth, profitability, and ability to navigate challenges in a dynamic business environment. It is crucial for businesses to regularly review and adapt their capital management strategies to align with changing market conditions and long-term objectives.
Reference
Capital Budgeting and Management Practices: Smoothing Out Rough Spots in Government Outlays.
by Srithongrung, Arwiphawee.
https://discovery.ebsco.com/linkprocessor/plink?id=bb98f28c-ded4-398f-8437-405a9cb73c89
https://discovery.ebsco.com/linkprocessor/plink?id=bb98f28c-ded4-398f-8437-405a9cb73c89
Components of Working Capital Management and Firm Profitability.
by Garg, Mahesh Chand; Meentu
https://discovery.ebsco.com/linkprocessor/plink?id=3bc0b5f5-2bc4-3317-bf27-17fe113f7e0a
Enterprise Risk Management and the Cost of Capital.
by Berry‐Stölzle, Thomas R.; Xu, Jianren.
https://discovery.ebsco.com/linkprocessor/plink?id=155bece6-a6e0-3f9d-bd34-ec3333b19d33
https://discovery.ebsco.com/linkprocessor/plink?id=155bece6-a6e0-3f9d-bd34-ec3333b19d33
Impact of Working Capital Management on Firm Profitability in Textile Sector.
by Garg, Mahesh Chand; Meentu
https://discovery.ebsco.com/linkprocessor/plink?id=2e57bce3-8094-36aa-a293-697a60a36cfd
The Interaction between LLP and SFAS 157 and Its Role in the Choice of Tools for Earnings and Capital Management by Banks during a Financial Crisis.
by ALALI, FATIMA; ANANDARAJAN, ASOKAN.
https://discovery.ebsco.com/linkprocessor/plink?id=c5ed1937-61cb-383b-8c8e-09bfd1228fa1
The Quality of Management Forecasts of Capital Expenditures and Store Openings in MD&A.
by Cole, Cathy J.; Jones, Christopher L..
https://discovery.ebsco.com/linkprocessor/plink?id=1667f3b9-2762-36ae-83e8-2558f425bba9
The Role of Financial Constraints in the Relationship Between Working Capital Management and Firm Performance.
by Kaushik, Nikhil; Chauhan, Swati.
https://discovery.ebsco.com/linkprocessor/plink?id=7c52574d-4a4b-3dc7-bd0b-71cedaf50183
The Role of Organizational Social Capital in the Design of Management Control Systems.
by Ströbele, Alexander; Wentges, Paul.
https://discovery.ebsco.com/linkprocessor/plink?id=bafb3d70-0957-3845-971b-b6dd05a8a822
Working capital management in SMEs.
by Baños-Caballero, Sonia; García-Teruel, Pedro J.; Martínez-Solano, Pedro.
https://discovery.ebsco.com/linkprocessor/plink?id=b04b9f99-7811-39c4-b260-ea35e38593a1
: Strategic Human Capital Management in Municipal Government.
by Jacobson, Willow S.; Sowa, Jessica E..
https://discovery.ebsco.com/linkprocessor/plink?id=63c0eee4-9c3f-3586-9f39-a249e5df0eab