Relationship between working capital and output-testing of the hypothesis developed
DOI:
https://doi.org/10.34140/bjbv7n1-063Palavras-chave:
output, optimum level, relationship, return, working capitalResumo
Keeping ideal level of working capital is a major challenge to finance manager as it affirms decent returns to corporate without jeopardizing its production. A viewer in this perspective, this paper eyeballs the relationship between working capital and output, as hypothesized by E. W. Walker, against the backdrop of JSW Steel Ltd., India's largest steel manufacturer over the period from 2019-2020-2023-2024. The study gears towards judging Walker's proposition, which propounds a direct and scaled relationship between a firm's working capital and its production output. Leveraging empirical data and simulated findings, the attempt explores JSW Steel’s financial and operational metrics to assess the relevance of Walker's theoretical base in a changing industrial landscape. Based on empirical investigation utilizing financial statements, working capital reports, and production data from JSW Steel Ltd. and simulation techniques, results exhibit that whilst Walker’s hypothesis stays staunch within defined and ideational parameters, pragmatic deployment exhibit big detour due to aspects like dynamic robust market, credit strategies, supply chain turmoil, and circumspect financial management systems endemic to JSW Steel. This research limelights the intricate interaction between financial management and functional output, accenting the need for holistic approach in managing working capital. Observations present explicit knowledge of working capital flows in colossal industrial functions, yielding sapiences for strategist and practitioners striving to build sustainability in the steel industry.
Referências
Agyemang, A. O., Twum, A. K., Nyeadi, J. D., & Amoah, J. O. (2022). The role of mobile money banking service in financial development: Evidence from Ghana. African Review of Economics and Finance, 14(2), 2–18
Agyemang, A. O., Yusheng, K., Twum, A. K., Edziah, B. K., & Ayamba, E. C. (2023). Environmental accounting and performance: Empirical evidence from China. Environment, Development and Sustainability, 1–26. https://doi. org/10.1007/s10668-022-02853-y
Ahmed, A. Y., & Mwangi, L. W. (2022). Working capital management and financial performance of small and medium enterprises in Garissa County, Kenya. International Journal of Current Aspects in Finance, Banking and Accounting, 4(1), 56–71. https://doi.org/ 10.35942/ijcfa.v4i1.229
Banerjee, P., & Guha Deb, S. (2023). Working capital management efficiency, managerial ability, and firm performance: new insights. Applied Economics, 56(33), 4001-4018. https://doi.org/10.1080/00036846.2023.2208857
Chadha, S. and Seth, H. (2020), “Ownership structure and capital structure: a panel data study”, International Journal of Business Innovation and Research, doi: 10.1504/IJBIR.2020.10024975, available at: https://www.inderscience.com/info/ingeneral/forthcoming.php?jcode=ijbir.
Chand, A., Akram, S., Akram, H., Murad, A. and Kareem, L. (2019), The impact of working capital management on firm profitability: a comparison between seasonal and non-seasonal businesses, Research Journal of Finance and Accounting, 10(15), 8-12.
DOI: 10.7176/RJFA
Chowdhury, A. Y., Alam, M. Z., Sultana, S., & Hamid, M. K. (2018). Impact of working capital management on profitability: A case study on pharmaceutical companies of Bangladesh. Journal of Economics, Business and Management, 6(1), 27–35.https://doi.org/10. 18178/joebm.2018.6.1.546
Feng, S., Zhang, R., & Li, G. (2022). Environmental decentralization, digital finance and green technology innovation. Structural Change and Economic Dynamics, 61, 70–83. https: //doi.org/10.1016/j. strueco.2022.02.008
Herison, R., Sahabuddin, R., Azis, M., & Azis, F. (2022). The effect of working capital turnover, accounts receivable turnover and inventory turnover on profitability levels on the Indonesia stock exchange 2015-2019. Psychology and Education, 59(1), 385–396.
Kaushik, N., & Chauhan, S. (2019). The role of financial constraints in the relationship between working capital management and firm performance. IUP Journal of Applied Finance, 25(1), 60. https://www.researchgate.net/publication/332269079
Li, M., & Mizuno, S. (2022). Dynamic pricing and inventory management of a dual-channel supply chain under different power structures. European Journal of Operational Research, 303(1), 273–285. https://doi. org/10.1016/j.ejor.2022.02.049
Louw, E., Hall, J. H., & Pradhan, R. P. (2022). The relationship between working capital management and profitability: Evidence from South African retail and construction firms. Global Business Review, 23(2), 313–333. https:// doi.org/10.1177/0972150919865104
Madhavi, K. (2014). Working Capital Management of Paper Mills, International Journal of Research in Business Management, 2(3), 63-72
Mahmud, A. A., Miah, M. S., & Bhuiyan, M. R. U. (2022). Does trade credit financing affect firm performance? Evidence from an emerging market. International Journal of Financial Studies, 10(4), 85. https://doi.org/ 10.3390/ijfs10040085
Nastiti, P. K. Y., Alachua, A. D. R., & Supramono, S. (2019). Working capital management and its influence on profitability and sustainable growth. Business: Theory and Practice, 20, 61-68. https://doi.org/10.3846/btp.2019.06
Nguyen, A. H., Pham, H. T., & Nguyen, H. T. (2020). Impact of working capital management on firm's profitability: Empirical evidence from Vietnam. The Journal of Asian Finance, Economics, and Business, 7(3), 115-125. https://doi.org/10.13106/JAFEB.2020.VOL7.NO3.115
Okphiabhele, E., Ibitomi, T., Dada, D. A., & Micah, E. E. M. (2022). Working capital management and profitability of industrial goods sector in Nigeria. European Journal of Accounting Auditing & Finance Research, 10(5), 74–90. https://doi.org/10.37745/ejaafr.2013/ vol10n5pp7490
Qadri, F. A., Altass, S., & Aman, Q. (2021). THE impact of cash conversion cycle on the performance of cement industry in Saudi Arabia. International Journal of Management (IJM), 12(2), 894–903. DOI: 10.34218/IJM.12.2.2021.087
S. Phassawan(2023).The mediating effect of profitability on the relationship between working capital management and sustainable growth, Studies in Business and Economics, 18 (1), 314-327. DOI: 10.2478/sbe-2023-0017
Seth, H., Chadha, S. and Sharma, S. (2019), Redesigning the efficiency process analysis for working capital models, Journal of Global Operations and Strategic Sourcing, 13(1), 38-55. doi: 10.1108/JGOSS-04-2019-0029.
Walkar, E. W. (1976), Essential of Financial Management, Eastern Economy Edition, Prentice Hall of India Pvt. Ltd., 64-65.
Zhou, Y., Agyemang, A. O., Adam, I. O., & Twum, A. K. (2022). Assessing the impact of technological innovation on environmental and financial performance of Chinese textile manufacturing companies. International Journal of Technology, Policy and Management, 22(4), 369–393. https://doi.org/10.1504/IJTPM.2022.126152
