n Management Dynamics : Journal of the Southern African Institute for Management Scientists - Factors influencing working capital management in South Africa
|Article Title||Factors influencing working capital management in South Africa|
|© Publisher:||Southern African Institute for Management Scientists (SAIMS)|
|Journal||Management Dynamics : Journal of the Southern African Institute for Management Scientists|
|Author||M. Beaumont Smith and L. Fletcher|
|Publication Date||Jan 2009|
|Pages||15 - 24|
This research investigates the factors influencing working capital management in South African industrial companies. Building on previous research, net liquid balance and working capital requirements were used as proxies for working capital management. These proxies were tested for influence of industry, turnover, debt ratio, cash flow and return on assets on the measures. Research results indicated no significant industry effect on working capital management. Similarly, original models built to measure the influence of the other four predictors on the working capital proxies did not reveal any significant influences. However, when absolute values were used, the study found that turnover displayed the greatest influence on working capital management. The findings suggest that by not considering subgroups in the variables, we might be overlooking, and hence not measuring, the underlying relationships between these variables.
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