The Effect of Working Capital Management on Firm’s Performance of Food and Beverages Sector in Malaysia
Abstract
This research examines the effect of working capital management (WCM) variables and firm’s performance using the data collected and analysed from listed firms in food and beverages sector on Bursa Malaysia. The sample comprises of 50 firms and the data is for 5 years from 2014 to 2018. The methodologies adopted in this research includes descriptive analysis, correlation analysis, Pooled Ordinary Least Square (OLS) regression, Breusch-Pagan (BP) Lagrange Multiplier test, and Hausman test. Various determinants of WCM have been identified to represent the independent variables (IV) namely days of accounts receivable, days of accounts payable, inventory turnover in days and cash conversion cycle. The dependent variable uses Return on Assets (ROA) as a proxy to measure the firm’s performance. In this study, these two variables, accounts payable and cash conversion cycle has a significant and positive effect towards firm’s performance of food and beverages sector in Malaysia.
References
Abdul Rahman, I., Memon, A.H., Nagapan, S., Latif, Q.B.A.I. & Abdul Azis, A.A (2012). Time and Cost Performance of Construction Projects in Southern and Central Regions of Peninsular Malaysia. Paper presented at 2012 IEEE Colloquium on Humanities, Science & Engineering Research (CHUSER 2012), December 3 -4, 2012
Ambreen, S., & Aftab, J. (2016). Impact of Free Cash Flow on Profitability of Firms Listed in Karachi Stock Exchange. Euro-Asian Journal of Economics and Finance, 4(4), 113-122.
Aziz, W. N. A. W. A., Hanif, N. R., & Singaravello, K. (2011). Affordable housing within the middle income households in Malaysia: Challenge to enter homeownership. Australian, Journal of Basic and Applied Sciences, 5(8), 258-67.
Bujang, A., Jiram, W. A., Zarin, H. A., & Jaafar, M. N. (2015). Factor affecting the housing financing of bumiputera in Iskandar Malaysia. Journal of Economics, Business and Management, 3(11), 1031-1036.
https://doi.org/10.7763/JOEBM.2015.V3.329
Carslaw, C.A. & Mills, J.R. 1991. Developing ratios for effective cash flow statement analysis. Journal of Accountancy, November: 63-70.
Davis, O. (2016). Statement Of Cash Flows: Issues In Cash Flow Reportıng In Estonıa, Tallınn Unıversıty Of Technology School of Economics and Business Administration Department of Accounting Chair of Management Accounting, Tallinn.
Endut, I.R., Akintoye, A. & Kelly, J. (2009). Cost and time overruns of projects in Malaysia. Proceedings of the 2nd Scottish Conference for Postgraduate Researchers of the Built and natural Environment (PRoBE), 16 - 17 November, 2005, Glasglow Caledonian University.
Frank, B. P., & James, O. K. (2014). Cash flow and Corporate Performance: A Study of Selected Food and Beverages Companies in Nigeria. European Journal of Accounting Auditing and Finance Research, 2(7), 77-87.
Gambacorta, L., Yang, J., & Tsatsaronis, K. (2014). Financial Structure and Growth. BIS Quarterly Review, 17(4), 21-35.
https://doi.org/10.1016/j.jfi.2016.09.005
Guo, M., & Wu, Q. (2013). The empirical analysis of affecting factors of Shanghai housing prices. International Journal of Business and Social Science, 4(14), 218-223.
Hashim, Z. A. (2010). House price and affordability in housing in Malaysia, Akademika, 78, 37-46.
Hui, H. C. (2013). Housing price cycles and aggregate business cycles: Stylised facts in the case of Malaysia. The Journal of Developing Areas, 47(1), 149-169.
https://doi.org/10.1353/jda.2013.0016
Ismail, S., Jalil, I. N., & Muzafar, M. M. (2015). Making housing affordable. Kuala Lumpur, Malaysia: Khazanah Research Institute.
Johansen, S. (1988). Statistical analysis of cointegration vectors. Journal of economic dynamics and control, 12(2-3), 231-254.
https://doi.org/10.1016/0165-1889(88)90041-3
Kang, H. H., & Liu, S. B. (2014). The impact of the 2008 financial crisis on housing prices in China and Taiwan: A quantile regression analysis. Economic Modelling, 42, 356-362.
https://doi.org/10.1016/j.econmod.2014.07.018
Lan, Z. J. (2012). The Cash Flow Statement: Tracing the Sources and Uses of Cash. AAII Journal, 34(7), 11-15.
Memon, A.E., Abdul Rahman, I., Abdullah, M.R. & Abdul Azis, A. A. (2011). Preliminary Study on Causative Factors Leading to Construction Cost Overrun. International Journal of Sustainable Construction Engineering & Technology, 2(1), 57-71.
https://doi.org/10.22452/jscp.vol2no1.4
Memon, A.E., Abdul Rahman, I., Abdullah, M.R. & Abdul Azis, A. A. (2010). Factor Affecting Construction Cost in Mara Large Construction Project: Perspective of Project Management Consultant. International Journal of Sustainable Construction Engineering & Technology, 1(2), 41-54
https://doi.org/10.22452/jscp.vol2no1.4
Nellis, J. G., & Longbottom, J. A. (1981). An empirical analysis of the determination of house prices in the United Kingdom. Urban Studies, 18(1), 9-21.
https://doi.org/10.1080/00420988120080021
Nyamache, T., Nyambura, R., & Mishra, P. Y. (2013). Impact Of Business Cycles On Industry Sectors : A Structural Economic Change In Kenya. International Journal of Research in Management, 5(3), 116-127.
Omag, A. (2016). Cash Flows from Financing Activities . Evidence from the Automotive Industry. International Journal of Academic Research in Accounting, Finance and Management Sciences, 6(1), 115-122.
https://doi.org/10.6007/IJARAFMS/v6-i1/1998
Ong, T. S. (2013). Factors affecting the price of housing in Malaysia. Journal of Emerging Issues in Economics, Finance and Banking, 1(5), 414-429.
Pour, M. S., Khani, P. N., Zamanian, G., & Barghandan, K. (2013). Specifying the effective determinants of house price volatilities in Iran. Economic Review: Journal of Economics & Business/Ekonomska Revija: Casopis za Ekonomiju i Biznis, 11(2), 15-20.
Ramanathan, C., Potty, N. S., & Idrus, A. B. (2012). Analysis of Time and Cost Overrun in Malaysian Construction. Advanced Materials Research, 452-453, 1002-1008.
https://doi.org/10.4028/www.scientific.net/AMR.452-453.1002
Schiantarelli, Fabio and Alessandro Sembenelli (2000) "Form of Ownership and Financial Constraints: Panel Data Evidence from Flow of Funds and Investment Equations," Empirica, 27(2), 175-92.
https://doi.org/10.1023/A:1026588619191
Tan, T. H. (2010). Base lending rate and housing prices: Their impacts on residential housing activities in Malaysia. Journal of Global Business and Economics, 1(1), 1-14.
Wijewaradana, W.P. ve Munasinghe P.G. (2015). Cash Flows and Firm Performance: Some Evidence from the Sri Lankan Firms Cash Flow, Journal of Management Matters Faculty of Management Studies, Rajarata University of Sri Lanka, Volume 2, Number 1, 41-48.
Xu, L., & Tang, B. (2014). On the determinants of UK house prices. International Journal of Economics and Research, 5(2), 57-64.
Zandi, G., Mahadevan, A., Supramaniam, L., Aslam, A., & Theng, L. K. (2015). The economical factors affecting residential property price: The case of Penang island. International Journal of Economics and Finance, 7(12), 200-210
Copyright (c) 2019 UNIMAS Review of Accounting and Finance
This work is licensed under a Creative Commons Attribution-NonCommercial-ShareAlike 4.0 International License.
Copyright Transfer Statement for Journal
1) In signing this statement, the author(s) grant UNIMAS Publisher an exclusive license to publish their original research papers. The author(s) also grant UNIMAS Publisher permission to reproduce, recreate, translate, extract or summarize, and to distribute and display in any forms, formats, and media. The author(s) can reuse their papers in their future printed work without first requiring permission from UNIMAS Publisher, provided that the author(s) acknowledge and reference publication in the Journal.
2) For open access articles, the author(s) agree that their articles published under UNIMAS Publisher are distributed under the terms of the CC-BY-NC-SA (Creative Commons Attribution-Non Commercial-Share Alike 4.0 International License) which permits unrestricted use, distribution, and reproduction in any medium, for non-commercial purposes, provided the original work of the author(s) is properly cited.
3) For subscription articles, the author(s) agree that UNIMAS Publisher holds copyright, or an exclusive license to publish. Readers or users may view, download, print, and copy the content, for academic purposes, subject to the following conditions of use: (a) any reuse of materials is subject to permission from UNIMAS Publisher; (b) archived materials may only be used for academic research; (c) archived materials may not be used for commercial purposes, which include but not limited to monetary compensation by means of sale, resale, license, transfer of copyright, loan, etc.; and (d) archived materials may not be re-published in any part, either in print or online.
4) The author(s) is/are responsible to ensure his or her or their submitted work is original and does not infringe any existing copyright, trademark, patent, statutory right, or propriety right of others. Corresponding author(s) has (have) obtained permission from all co-authors prior to submission to the journal. Upon submission of the manuscript, the author(s) agree that no similar work has been or will be submitted or published elsewhere in any language. If submitted manuscript includes materials from others, the authors have obtained the permission from the copyright owners.
5) In signing this statement, the author(s) declare(s) that the researches in which they have conducted are in compliance with the current laws of the respective country and UNIMAS Journal Publication Ethics Policy. Any experimentation or research involving human or the use of animal samples must obtain approval from Human or Animal Ethics Committee in their respective institutions. The author(s) agree and understand that UNIMAS Publisher is not responsible for any compensational claims or failure caused by the author(s) in fulfilling the above-mentioned requirements. The author(s) must accept the responsibility for releasing their materials upon request by Chief Editor or UNIMAS Publisher.
6) The author(s) should have participated sufficiently in the work and ensured the appropriateness of the content of the article. The author(s) should also agree that he or she has no commercial attachments (e.g. patent or license arrangement, equity interest, consultancies, etc.) that might pose any conflict of interest with the submitted manuscript. The author(s) also agree to make any relevant materials and data available upon request by the editor or UNIMAS Publisher.
