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Does Diversification Affect Capital Structure and Profitability in Pakistan?  [cached]
Muhammad Azeem Qureshi,Waqas Akhtar,Muhammad Imdadullah
Asian Social Science , 2012, DOI: 10.5539/ass.v8n4p30
Abstract: Diversification has become a common strategy of corporate risk management along with availing other potential benefits. The intent of this study is to identify and analyze the nature of relationship that exists between diversification and capital structure as well as profitability in Pakistan. For this purpose we use the 10 years’ (2000-2009) data of all the companies of chemical and food sector listed at the Karachi Stock Exchange (KSE). We find that the diversified firms are more profitable. Using independent variables of firm size, growth and tangibility the results show that whenever significant, the relationship is associated with greater amount of debt held by the firms.
Profitability in Swedish Micro Firms: A Quantile Regression Approach  [cached]
A. Khalik Salman,Darush Yazdanfar
International Business Research , 2012, DOI: 10.5539/ibr.v5n8p94
Abstract: The purpose of this study is to identify a function for the profitability of Swedish micro firms in the sectors of health, transport, trade and metal. In order to understand how micro firms relate to key variables, such as firm size, growth of sales, productivities, lagged profits, asset turnover and firm’s age, OLS (Ordinary Least Squares), and the more robust quantile regression techniques, are used to estimate micro-firm profitability. Data from 2007 is used for this purpose. The results show that growth (competitive condition) and total factor productivity (comparative advantage) have a significant positive effect on micro-firm profitability, and that size (diminishing returns states) is found to have a rather significant negative effect on micro-firm profitability. The results also indicate a strong relationship between microeconomic theory suggestions and micro-firm profitability for the all micro firms except those in the metal sector. Moreover, the quantile regression approach provided a better understanding, regarding the dynamics of the factors that affect profitability, and provided more interesting results than OLS normally do.
Influence of Working Capital Management on Firms Profitability: A Case of SMEs in Kenya
Muchina Stephen,Kiano Elvis
International Business Management , 2012, DOI: 10.3923/ibm.2011.279.286
Abstract: Working capital management plays a significant role in better performance of business entities. This study analyzes the influence of working capital management on firm s profitability Kenya. For this purpose, fixed panel data of 232 firms was used. The results indicate that the average debtors day, stock turnover period and the cash conversion cycle are significantly affecting the profitability of the firms. The manufacturing firms are in general facing problems with their collection and payment policies. Moreover, the financial leverage, ratio of current asset to current liability and firm size also have significant effect on the firm s profitability. The study also concludes that SMEs in Kenya are following conservative working capital management policy and the firms are needed to concentrate and improve their collection and payment policy. The effective policies must be formulated for the individual components of working capital. Furthermore, efficient management and financing of working capital (current assets and current liabilities) can increase the operating profitability of manufacturing firms. For efficient working capital management, specialized persons in the fields of finance should be hired by the firms for expert advice on working capital management in the manufacturing sector.
Ege Academic Review , 2009,
Abstract: It is aimed to determine the firm characteristics that affect the capital structure of the firms in ISE service sector. In this context information obtained from the financial tables of the firms is analysed by using panel data analysis with regression model. According to the findings of the study the most important firm characteristics that affect the capital structure of service firms are profitability, firm size, liquidity and tangibility of firm assets. The findings of the study are parallel with the pecking order theory and nondebt tax shields, growth opportunities, business risk, tax and cost of debt are found to be unimportant factor that do not affect capital structure of service firms.
Mahira Rafique
Economics and Finance Review , 2011,
Abstract: This paper focuses on investigating the effect of the profitability of the firm and its financial leverage on the capital structure of the automobile sector companies in Pakistan. To proceed with this, the capital structure of 11 listed firms has been analyzed by adopting an econometric framework over a period of five years. Estimating regression analysis and checking the relationship of the estimated model through Correlation Coefficient Test, we found that the profitability of the firm and its financial leverage have an insignificant impact on the capital structure of the studied firms during the examined period. Hence, the study is unable to establish any significant relation between profitability and financial leverage effect on the capital structure of a firm.
The Optimal Relationship of Cash Conversion Cycle with Firm Size and Profitability  [PDF]
Muneeb Ahmad Attari,Kashif Raza
International Journal of Academic Research in Business and Social Sciences , 2012,
Abstract: Cash conversion cycle (CCC) has been considered a useful measure of firm’s effective working capital management and especially the cash management. This study was conducted with the aim to look into the association of the cash conversion cycle with the size and profitability of the firms in the four specific manufacturing sectors listed at Karachi Stock Exchange namely Automobile and Parts, Cement, Chemical, and Food Producers. The data was collected from the annual reports of 31 sampled firms out of the total firms in the related sectors i.e. 143 covering the period of 2006-2010. The data analysis was conducted by using One-Way ANOVA and Pearson correlation techniques. The lowest mean value of the CCC length is found in the cement industry, with an average of -52.38 days, and the highest mean value of the CCC is found in the Automobiles industry, with an average of 73.72 days. As was expected there was found a significant negative correlation between the CCC and the firm size in terms of total assets, and was found a negative correlation between CCC and profitability in terms of return on total assets with the values of -0.415 and -0.131 respectively. This study presents an update account of the investigation into the subject matter of cash management- an area which is not very much researched upon in the developing nations like Pakistan. Within the particular context of the liquidity management it is supposed to be valuable for setting up ideal threshold points in the related sectors. Despite having limited base for data analysis, the present study has a number of useful implications and is supposed to be insightful for the finance managers, industry planners, academics and researchers.
Impact of Capital Structure on Firm Value: Evidence from Indian Hospitality Industry  [PDF]
Divya Aggarwal, Purna Chandra Padhan
Theoretical Economics Letters (TEL) , 2017, DOI: 10.4236/tel.2017.74067
Abstract: This study examines the effect of capital structure and firm quality on firm value of selected BSE listed Indian hospitality firms over a time frame of 2001-15. Variables including firm quality measured through Altman Z score, leverage, size, profitability, tangibility, growth, liquidity along with macro variables of growth in gross domestic product and inflation are taken into consideration for examining their impact on firm value. An empirical study has been carried out through panel data techniques by applying pooled OLS, fixed effects and random effects models. The findings of the study reveal a significant relationship of firm value with firm quality, leverage, liquidity, size and economic growth. The study shows that Modigliani miller theorem of capital structure irrelevance does not hold for Indian hospitality sector. It is of practical significance for hotel owners to reassess their capital structure to improve firm quality and firm’s market performance.
Size and sector effects on the profitability, indebtedness and debt cost of La Rioja family firms  [cached]
Cuadernos de Gestión , 2004,
Abstract: Based on the data taken from the financial reports of a sample of 721 family businesses in the Autonomous Community of La Rioja, the authors analyze the impact of the size of the enterprise and the industry where it operates, as well as the size-industry ratio, on profitability, indebtedness and debt cost levels for the period 1996-2000. Using a variance analysis, they conclude that the factors main industry and size-industry ratio do not have any impact on dependent variables. Moreover, they prove that the size of the enterprise and its sustained profitability are indirectly linked and that size and debt cost levels are also related.
The Effect of Working Capital Management on Firm Profitability: Evidence from Turkey
F. Samiloglu,K. Demirgunes
The International Journal of Applied Economics and Finance , 2008,
Abstract: The aim of this study is to analyze the effect of working capital management on firm profitability. In accordance with this aim, to consider statistically significant relationships between firm profitability and the components of cash conversion cycle at length, a sample consisting of Istanbul Stock Exchange (ISE) listed manufacturing firms for the period of 1998-2007 has been analysed under a multiple regression model. Empirical findings of the study show that accounts receivables period, inventory period and leverage affect firm profitability negatively; while growth (in sales) affects firm profitability positively.
Six Sigma and Implementations of Six Sigma in Finance Sector
Gokhan Senol,Adem Anbar
Business and Economics Research Journal , 2010,
Abstract: Quality is a one of the critical factors for achieving competitive advantage. Six sigma approach is a business strategy which usage has increased gradually in last years for quality improvement initiative. Although six sigma established by a manufacturing firm and it has been successfully implemented in many manufacturing firms, service firms have began to use six sigma for reducing cost, enhanced quality of service, increasing customer satisfaction and profitability. In this paper, six sigma was examined in a view of finance sector and applications of six sigma within the finance sector were evaluated.
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