Effects of Working Capital and Financial Flexibility on Competitive Ability of Companies in Tehran Stock Exchange

Working capital management is one of the most important issues for financial managers, and they always try to determine the rational level of working capital to manage their activities. Cash conversion cycle is the indicator used for measuring working capital. When a firm uses its sources rationally...

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Autores principales:	Asghar Soltani, Shekoofeh Farahmand, Rasool Arabi
Formato:	article
Lenguaje:	FA
Publicado:	Shahid Bahonar University of Kerman 2015
Materias:	working capital financial flexibility competitive ability cash conversion cycle Accounting. Bookkeeping HF5601-5689
Acceso en línea:	https://doaj.org/article/d377fb0f777f44f39860346001262052
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spelling	oai:doaj.org-article:d377fb0f777f44f398603460012620522021-11-04T19:48:50ZEffects of Working Capital and Financial Flexibility on Competitive Ability of Companies in Tehran Stock Exchange2008-89142476-292X10.22103/jak.2015.1413https://doaj.org/article/d377fb0f777f44f398603460012620522015-11-01T00:00:00Zhttps://jak.uk.ac.ir/article_1413_72d489e060e220237e60e4415db72717.pdfhttps://doaj.org/toc/2008-8914https://doaj.org/toc/2476-292XWorking capital management is one of the most important issues for financial managers, and they always try to determine the rational level of working capital to manage their activities. Cash conversion cycle is the indicator used for measuring working capital. When a firm uses its sources rationally to react to unexpected financial situation, sources of working capital may provide competitive ability for the firm. In this study, a sample of 257 companies listed in the Tehran Stock Exchange in a period of11 years from 2002 to 2012 was selected to assess the expected effects of working capital and financial flexibility on competitive ability of the firms. Data analysis was carried out by the generalized momentum method. The results indicated that there exists a positive and significant relationship between current asset turnover period and competitive ability, and that there are negative and significant relationships between the three variables of receivables collection period, payable turnover period, and cash conversion cycle, and the variable of competitive ability. Also, the results showed that there are not significant relationships between the three variables of inventory turnover period, current ratio, and quick ratio, and the variable of competitive ability. The results of this study revealed that working capital management has widely effects on the competitive ability in market and the functional efficiency of the firms, and that working capital ability has positive effects on the competitive ability in products market, but such effects reduce when working capital ability decreases below a certain level.Asghar SoltaniShekoofeh FarahmandRasool ArabiShahid Bahonar University of Kermanarticleworking capitalfinancial flexibilitycompetitive abilitycash conversion cycleAccounting. BookkeepingHF5601-5689FAمجله دانش حسابداری, Vol 6, Iss 22, Pp 153-175 (2015)
institution	DOAJ
collection	DOAJ
language	FA
topic	working capital financial flexibility competitive ability cash conversion cycle Accounting. Bookkeeping HF5601-5689
spellingShingle	working capital financial flexibility competitive ability cash conversion cycle Accounting. Bookkeeping HF5601-5689 Asghar Soltani Shekoofeh Farahmand Rasool Arabi Effects of Working Capital and Financial Flexibility on Competitive Ability of Companies in Tehran Stock Exchange
description	Working capital management is one of the most important issues for financial managers, and they always try to determine the rational level of working capital to manage their activities. Cash conversion cycle is the indicator used for measuring working capital. When a firm uses its sources rationally to react to unexpected financial situation, sources of working capital may provide competitive ability for the firm. In this study, a sample of 257 companies listed in the Tehran Stock Exchange in a period of11 years from 2002 to 2012 was selected to assess the expected effects of working capital and financial flexibility on competitive ability of the firms. Data analysis was carried out by the generalized momentum method. The results indicated that there exists a positive and significant relationship between current asset turnover period and competitive ability, and that there are negative and significant relationships between the three variables of receivables collection period, payable turnover period, and cash conversion cycle, and the variable of competitive ability. Also, the results showed that there are not significant relationships between the three variables of inventory turnover period, current ratio, and quick ratio, and the variable of competitive ability. The results of this study revealed that working capital management has widely effects on the competitive ability in market and the functional efficiency of the firms, and that working capital ability has positive effects on the competitive ability in products market, but such effects reduce when working capital ability decreases below a certain level.
format	article
author	Asghar Soltani Shekoofeh Farahmand Rasool Arabi
author_facet	Asghar Soltani Shekoofeh Farahmand Rasool Arabi
author_sort	Asghar Soltani
title	Effects of Working Capital and Financial Flexibility on Competitive Ability of Companies in Tehran Stock Exchange
title_short	Effects of Working Capital and Financial Flexibility on Competitive Ability of Companies in Tehran Stock Exchange
title_full	Effects of Working Capital and Financial Flexibility on Competitive Ability of Companies in Tehran Stock Exchange
title_fullStr	Effects of Working Capital and Financial Flexibility on Competitive Ability of Companies in Tehran Stock Exchange
title_full_unstemmed	Effects of Working Capital and Financial Flexibility on Competitive Ability of Companies in Tehran Stock Exchange
title_sort	effects of working capital and financial flexibility on competitive ability of companies in tehran stock exchange
publisher	Shahid Bahonar University of Kerman
publishDate	2015
url	https://doaj.org/article/d377fb0f777f44f39860346001262052
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Effects of Working Capital and Financial Flexibility on Competitive Ability of Companies in Tehran Stock Exchange

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