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Published in:

Volume 9 Issue 7
July-2022
eISSN: 2349-5162

UGC and ISSN approved 7.95 impact factor UGC Approved Journal no 63975

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Published Paper ID:
JETIR2207694


Registration ID:
500614

Page Number

g715-g730

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Title

Management of Cash Conversion Cycle and Firms’ Profitability: A Panel Data Analysis

Abstract

Abstract: The focus of this paper is to examine the trend and interrelation with the various components of cash conversion cycle and profitability of the firms except financial and service sectors’ firm listed in the Bombay stock Exchange. This study has considered the cash conversion cycle (CCC), key to working capital management. The several elements of CCC are Inventory Conversion Period (ICP), Debtors’ collection period (DCP) and Creditors’ payment period (CPP). This Inventory conversion period (ICP) formed by the collection of Material Storage Period (MSP), Material Conversion Period (MCP), Finished Goods storage Period (FGP). This study tries to investigate the trend of sub-component of Inventory Conversion Period (ICP) and other elements cash conversion cycle as well as the impact of these components on profitability. Using panel data analysis and taking the data of 203 sample companies for five years this study reveals that MSP, MCP and FGP have positive effect but the result is not statistically significant. It inferred that there is an inverse relationship between Profitability and components of Inventory Conversion Period (ICP). The result of Hausman test found that null hypothesis i.e. “Random effect model is appropriate for regression of Profitability (ROA) estimation” is significant at 5% level of significance and is rejected as p-value is less than 0.05. Therefore, alternative hypothesis i.e. “Fixed effect model is appropriate for regression of Profitability (ROA) estimation” is accepted. The multiple coefficient of determination (R Square) is 11 % in case of ROA estimation under fixed effect regression analysis. It implies that 11% variation in ROA is explained by the predictor variables selected in this study.

Key Words

Components of Inventory Conversion Period; Working Capital Management; Cash Conversion Cycle; Profitability

Cite This Article

"Management of Cash Conversion Cycle and Firms’ Profitability: A Panel Data Analysis", International Journal of Emerging Technologies and Innovative Research (www.jetir.org), ISSN:2349-5162, Vol.9, Issue 7, page no.g715-g730, July-2022, Available :http://www.jetir.org/papers/JETIR2207694.pdf

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2349-5162 | Impact Factor 7.95 Calculate by Google Scholar

An International Scholarly Open Access Journal, Peer-Reviewed, Refereed Journal Impact Factor 7.95 Calculate by Google Scholar and Semantic Scholar | AI-Powered Research Tool, Multidisciplinary, Monthly, Multilanguage Journal Indexing in All Major Database & Metadata, Citation Generator

Cite This Article

"Management of Cash Conversion Cycle and Firms’ Profitability: A Panel Data Analysis", International Journal of Emerging Technologies and Innovative Research (www.jetir.org | UGC and issn Approved), ISSN:2349-5162, Vol.9, Issue 7, page no. ppg715-g730, July-2022, Available at : http://www.jetir.org/papers/JETIR2207694.pdf

Publication Details

Published Paper ID: JETIR2207694
Registration ID: 500614
Published In: Volume 9 | Issue 7 | Year July-2022
DOI (Digital Object Identifier):
Page No: g715-g730
Country: Kolkata, West Bengal, India .
Area: Commerce
ISSN Number: 2349-5162
Publisher: IJ Publication


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