A research report submitted to the Faculty of Commerce,Law and Management in fulfilment of the requirements for the degree of Master of Commerce in Finance. / Cash flow is one of the critical factors influencing the operational, investments and
financing decisions of a firm. Since working capital management deals with shortterm
cash flows, this research explores the interaction between working capital
management and profitability. Utilising 110 South African industrial firms listed on
the JSE and ALTX this study firstly investigates the impact of working capital
management on the profitability of firms from 2001-2010. Secondly this study
investigates the impact of different working capital policies on profitability of South
African industrial firms. The results show that after removing the problems
associated with panel data, the cash conversion cycle which is the main measure of
working capital is negatively related to both measures of profitability (return on
assets and return on equity). The results of the study have also revealed that
profitable firms have less days in account receivables, days in inventory, days in
accounts payables, leverage ratio and high sales revenue. Lastly the sectorial
analysis was conducted and the results revealed heterogeneous working capital
management patterns.
| Identifer | oai:union.ndltd.org:netd.ac.za/oai:union.ndltd.org:wits/oai:wiredspace.wits.ac.za:10539/12817 |
| Date | 12 July 2013 |
| Creators | Chirume, Tariro |
| Source Sets | South African National ETD Portal |
| Language | English |
| Detected Language | English |
| Type | Thesis |
| Format | application/pdf |
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