Downloads

Stephen, K. (2023). Determinants of Working Capital Management: A Case of Listed Manufacturing Companies in Tanzania. Economics & Management Information, 2(2), 1–8. https://doi.org/10.58195/emi.v2i2.62

Determinants of Working Capital Management: A Case of Listed Manufacturing Companies in Tanzania

The study examines on the determinants of working capital management. The study came about following a necessity of managing working capital for efficient running of firm’s day- to-day operations. By taking samples of 10 manufacturing firms listed in Dar es Salaam stock exchange period of 2012-2023. It is found that there are positive and significant effects of firm size, profitability and cash conversion cycle on working capital, while leverage and capital expenditure revealed to be positive and insignificant determinant of working capital management. Morefurther, firm growth and cash flows found to be negative and significant determinant of working capital. It is from those results of analysis, this study recommends the financial managers to efficiently focus much on managing firm size, profitability and gross domestic product while less effort being subjected to firm leverage and capital expenditures to sales management.

working capital management firm size firm growth cash conversion cycle leverage operating cash flow profitability and capital expenditures

References

  1. Akbar A, Jiang X, Akbar M. Do Working Capital Management Practices Influence Investment and Financing Patterns of Firms?.Journal of Economic and Administrative Sciences 2022; 38(1): 91–109.
  2. Alvarez T, Sensin L, Vazquez M. Working Capital Management and Profitability: Evidence From an Emergent Economy. International Journal of Advances in Management and Economics 2021; 11(1): 32–39.
  3. Amponsah-Kwatiah K, Asiamah M. Working Capital Management and Profitability of Listed Manufacturing Firms in Ghana. International Journal of Productivity and Performance Management 2021; 70(7): 1751–1771.
  4. Anton SG, AfroareiNucu AE. The Impact of Working Capital on Firm Profitability: Empirical Evidence From the Polish Listed Firms. Journal of Risk and Financial Management 2020; 4(1): 9.
  5. Bhattachrya H. Working Capital Management: Strategies and Techniques; PHI Learning Pvt. Ltd: New Delhi, India, 2021.
  6. Boisjoly RP, Conine JTE, Mcdonald IV MB. Working Capital Management: Financial and Valuation Impacts. Journal of Business Research 2020; 108: 1–8.
  7. Crouzet N, Eberly JC. Understanding Weak Capital Investment: the Role of Market Concentration and Intangibles (No. W25869); National Bureau of Economic Research: Cambridge, MA, USA, 2019.
  8. Deloof M, Jegers M. Trade Credit, Product Quality and Intra Group Trade: Some European Evidence. Financial Management 1996; 25 (3): 33–43.
  9. Demirel P, Danisman GO. Eco-Innovation and Firm Growth in the Circular Economy: Evidence From European Small-and-Medium-Sized Enterprises. Business Strategy and the Environment 2019; 28(8): 608–1618.
  10. Dhole S, Mishra S, Pal AM. Efficient Working Capital Management, Financial Constraints and Firm Value: a Text-Based Analysis. Pacific-Basin Finance Journal 2019; 58: 101212.
  11. Dirman A. Financial Distress: the Impacts of Profitability, Liquidity, Leverage, Firm Size and Free Cash Flow. International Journal of Business, Economics and Law 2020; 22(1): 17–25.
  12. Fatimatuzzahra M, Kusumastuti R. The Determinant of Working Capital Management of Manufacturing Companies. Mimbar: JurnalSosial Dan Pembangunan 2016; 32: 276–281.
  13. Haralayya B. Working Capital Management at Tvs Motors, Bidar. Iconic Research and Engineering Journals 2021; 4(12): 255–265.
  14. Hirdinis M. Capital Structure and Firm Size on Firm Size on Firm Value Moderated By Profitability. International Journal of Economics and Business Administration 2019; VII: 174–191.
  15. Hoang KMT, Phung TA. The Effect of Financial Leverage on Real and Accrual-Based Earnings Management in Vietnarnese Firms. Economics & Sociology 2019; 12(4): 299–333.
  16. Husna A, Satria I. Effects of Return on Asset, Debt to Asset Ratio, Current Ratio Firm Size, and Dividend Payout Ratio on Firm Value. International Journal of Economics and Financial Issues 2019; 9(5): 50–54.
  17. Ibrahim UA, Isiaka A. Effect of Financial Leverage on Firm Value: Evidence From Selected Firms Quoted on the Nigerian Stock Exchange. European Journal of Business and Management 2020; 12(3): 124–135.
  18. Kabuye F, Kato J, Akugizibwe I, Bugambiro N. Internal Control Systems, Working Capital Management and Financial Performance of Supermarkets. Cogent Business & Management 2019; 6(1): 1573524.
  19. Khan SZ, Yang Q, Waheed A. Investment Intangible Resources and Capabilities Spurs Sustainable Competitive Advantage and Firm Performance. Corporate Social Responsibility and Environmental Management, 2019; 26(2): 285–295.
  20. Kilby P, Liedholm CE, Meyer RL. Working Capital and Non Farm Rural Enterprises; Routledge: London, UK, 2021; 266–283.
  21. Le B. Working Capital Management and Firm’s Valuation, Profitability and Risk: Evaluation From a Developing Market. International Journal of Managerial Finance 2019; 15: 191–204.
  22. Morshed A. Role of Working Capital Management in Profitability Considering the Connection Between Accounting and Finance. Asian Journal of Accounting Research 2020; 5(2): 257–267.
  23. Moulton HG. Commercial Banking and Capital Formation. The Journal of Political Economy 1918; 26(7): 32–38.
  24. Nalarreason KM, Sutrisno T, Mardiati E. Impact of Leverage and Firm Size on Earnings Management in Indonesia. International Journal of Multicultural and Multi-Religious Understanding 2019; 6(1): 19–24.
  25. Nazir MS, Afza T. On the Factors Determining Working Capital Requirements. 15th Annual Conference of American Society of Business and Behavioral Sciences, Las Vegas, NV, USA, 21–24 February 2008.
  26. Nguyen AH, Pham HT, Nguyen HT. Impact of Working Capital Management on Firm’S Profitability. Empirical Evidence From Vietnam. The Journal of Asian Finance, Economics and Business 2020; 7(3): 115–125.
  27. Pakdel M, Ashrafi M. Relationship Between Working Capital Management and the Performance of Firm in Different Business Cycles. Dutch Journal of Finance and Management 2019; 3(1): Em0057.
  28. Salehi M, Mahdavi N, Zarif ADS, Tarighi H. Association Between the Availability of Financial Resources and Working Capital Management With Stock Surplus Returns in Iran. International Journal of Emerging Markets 2019; 14(2): 343–361.
  29. Wang Z, Akbar M, Akbar A. The Interplay Between Working Capital Management and a Firm’s Financial Performance Across the Corporate Life Cycle. Sustainability 2020; 12(4): 1661.
  30. Zariyawati A, Sen M, Oruc E. Relationship Between Efficiency Level of Working Capital Management and Return on Total Assets in ISE. International Journal of Business and Management 2009; 4(10): 109–11.
  31. Zuhroh I. The Effects of Liquidity, Firm Size, and Profitability on the Firm Value With Mediating Leverage. Kne Social Sciences 2019; 3(13): 203–230.

Supporting Agencies

  1. Funding: Not applicable.