The ultimate goal of firms is to make a profit and to achieve this ultimate goal, firms execute various functions. Finance is one of the basic functions of firms and firms need financial instruments such as cash reserve and outsource to carry out their activities. Cash management within the finance function is an important issue that needs to be carefully considered, especially in the short and medium term financial planning stage. Presently, the high competition among firms forces companies to manage their cash in the most effective way. The conceptual studies on the subject are quite old and date back to Keynes. According to Keynes, firms demand cash for transaction, prudence and speculation. As a result of analysis, it has been determined that cash conversion cycle has an impact on return on assets (ROA) and return on equity (ROE). There is a statistically significant and negative relationship between cash conversion cycle (CCC) return on assets (ROA) and return on equity (ROE). In addition, there is a positive relationship between return on assets (ROA) and firm size while there is a negative and statistically significant relationship between debt ratio (DEBT) and return on assets (ROA).

The research is aiming at assessing the effect of cash conversion cycle on profitability of the firm. Three components are used to measure cash conversion cycle (CCC); average receivable period (ARP), average inventory period (AIP) and average payable period (APP). Henceforth, cash conversion cycle and its determinants are taken as Independent variables. The dependent variable is profitability being measured by return on asset (ROA). The data was collected with the help of pooled data containing a sample of 10 firms of two manufacturing sector such as Oil & Gas and Engineering, listed on PSX for the period 2010-2018. Regression and correlation techniques were used for analysis and come up with the outcomes that average receivable period and average inventory period have an adverse significant association with profitability of the firm except average payable period. In the end, there exists a highly negative significant association among CCC and firm’s profitability as ROA. The ...

While devising working capital policy, cash conversion cycle (CCC) is central to management deliberation particularly in manufacturing concern. Because CCC impact firm’s profitability and liquidity. In the past, business literature has documented ample evidences related to cash conversion cycle and firm’s profitability but the results are mixed and not definite to generalize it into different business settings and environment. the purpose of this study is to investigate the phenomena of cash conversion cycle in relation to firm’s probability of manufacturing sector of Pakistan. The study used Causal co relational research design for 56 manufacturing firms listed at Pakistan stock exchange covering a period from 2014-2017. Using descriptive statistics, correlation and regression analysis, it is concluded that longer the duration of turnover in days of the cash conversion cycle, less capital will be employed in short-term assets and ultimately capital investment will be more in hand w...

Effect of Cash Conversion Cycle on Financial performance of quoted companies in Nigeria

Cash conversion cycle (CCC) is an important metric of not only effective working capital management but also the cash management of the firm. This research study was conducted with the objective to look into the relationship of the cash conversion cycle with profitability of the tobacco firms in Pakistan. This study is about evaluating how cash conversion cycle affects the profitability of listed tobacco firms in Pakistan. The research objective of the present study is to examine the existing literature regarding cash conversion cycle and its part in enhancing firm " s profitability, which is measured by using the proxy of return on equity. The study takes return on equity as measures of profitability to represent dependent variable. Firm size and debt ratio are taken as control variables. The Cash conversion cycle is considered as an independent variable. Study takes into consideration the three listed tobacco firms of Pakistan for a period of 8 years starting from 2010 to 2017. The data was analyzed by pooled regression; the results showed a significant positive relationship of cash conversion cycle with return on equity. On the other hand, the debt ratio and firm size had an insignificant relationship with return on equity. The significant positive relationship of cash conversion cycle with return on equity in this study indicates that it is not always necessary thatlower the cash conversion cycle, greater would be the profitability of the tobacco firms in Pakistan, measured through return on equity. In this case it shows that tobacco firms are not under pressure to reduce their receivable collection and inventory selling time period in order to increase their profitability. Moreover the tobacco firms are also not under pressure to increase their payment period to increase their profitability, measured by return on equity.

This study aims to investigate the relationship between cash conversion cycle and financial characteristics. A sample of Jordanian different industrial sector of 11 was selected covering the period 2005-2011 listed on the Amman Stock Exchange (ASE). Cash conversion cycle is an important measure for companies in measuring the operating cycle where the work cycle of raw materials for the purposes of manufacturing and production that ends the existence of a good or service offers customers ready. Hence, the flow of financial resources in firms is very important supply chain and presents the center of attention. The results of this study indicate there is statistically significant and positive relationship between cash conversion cycle and independent variables, such as: debt, market, productivity, liquidity and dividends indicator at different significant level 1% and 5%, and the size indicator is weak relationship with significant level at 10% and there is no significant relationship ...

The primary objective of this research is to examine the relationship between cash conversion cycle (CCC) and net profit margin (NPM) of cement industry of Saudi Arabia. The study selected five companies out of 14 companies from Saudi Arabia's cement industry over the period from 2009 to 2019. The relationship between CCC and NPM was investigated using correlation and regression analysis. The analysis shows that the cash exchange period and the net profit margin have a negative association. As explained this study is based on cement industry hence its result cannot be generalised with other manufacturing companies however similar studies across the Saudi industries could be conducted to identify the presence of a relationship between CCC and NPM.