The Relationships Between Cash Cycle, Sales Growth and Profitability and The Effect of COVID–19 pandemic of Listed Companies on The Stock Exchange of Thailand
Article Sidebar
Main Article Content
Abstract
This article aimed to study (1) the relationships between working capital and profitability, (2) the relationships between sales growth and profitability, and (3) the effect of the COVID-19 pandemic on profitability. The sample consisted of companies listed on the Stock Exchange of Thailand, excluding financial industry groups, from 2018 to 2022. After being selected by the purposive sampling technique, the sample consisted of 325 companies with completed data. This research is quantitative. The data used in the research was secondary data. Data was collected from financial reports for 5 periods, totaling 1,625 sets. Descriptive statistics and inferential statistics, consisting of the Pearson correlation coefficient and multiple regression analysis, were used to analyze the data.
The research results were found as follows: 1) The working capital management measured by the cash cycle had negative relationships with profitability measured by return on total assets, return on stockholders’ equity, and net profit margin. It was demonstrated that reducing the days of the cash cycle causes an increase in profitability. 2) Sales growth has a positive relationship with profitability, which means that increased sales growth will increase profitability. 3) The COVID-19 pandemic had a negative impact on profitability.
The research results confirm the benefits of working capital management, which can improve profitability. Firms need to reduce cash cycle periods in order to increase profitability. However, during the COVID-19 pandemic situation, the firm's profitability decreased.
Article Details
This work is licensed under a Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 International License.
Views and opinions appearing in articles in the Journal of Arts of Management It is the responsibility of the author of the article. and does not constitute the view and responsibility of the editorial team I agree that the article is copyright of the Arts and Management Journal.
References
Abdul, R. S., Anis, A., & Alanazi, I. D. (2023). Working capital and financial performance in the energy sector of saudi arabia: Moderating role of leverage. International Journal of Energy Economics and Policy, 13(3), 158-163. https://doi.org/10.32479/ijeep.14254
Ahmad, M., Bashir, R., & Waqas, H. (2022). Working capital management and firm performance: Are their effects same in COVID-19 compared to financial crisis 2008?. Cogent Economics & Finance, 10(1). https://doi.org/10.1080/23322039.2022.2101224
Banerjee, P., & Deb, S. G. (2023), Capital investment, working capital management, and firm performance: Role of managerial ability in US logistics industry, Transportation Research Part E: Logistics and Transportation Review, 176, 1-25. https://doi.org/10.1016/j.tre.2023.103224.
Bank of Thailand. (2022). Looking at the economy in 2022, the first step after the COVID-19 storm. https://www.bot.or.th/th/research-and-publications/articles-and-publications/bot-magazine/Phrasiam-64-6/The-Knowledge-64-6-1.html
Bank of Thailand. (2023). Press Release on the Economic and Monetary Conditions for August of 2023.
Bhardwaj, S. (2022). Stocks that manage working capital efficiently [ET wealth]: Low cash conversion cycle improves profitability and also aids in creating shareholder value. The Economic Times. https://www.proquest.com/newspapers/stocks-that-manage-working-capital-efficiently-et/docview/2735681019/se-2
Chambers, N., & Cifter, A. (2022), Working capital management and firm performance in the hospitality and tourism industry, International Journal of Hospitality Management, 102, 1-11. https://doi.org/10.1016/j.ijhm.2022.103144
Das, S. (2023). Working capital management and profitability of the firm-an empirical study on the FMCG sector. Journal of Commerce and Accounting Research, 12(2), 73-82. https://www.proquest.com/scholarly-journals/working-capital-management-profitability-firm/docview/2833746575/se-2
Francis, M. (2023). Contribution of working capital management on financial performance of selected consumer goods in Nigeria industry. International Research Journal of Innovations in Engineering and Technology, 7(7), 149-152.
DOI: https://doi.org/10.47001/IRJIET/2023.707023
Grover, G., Jain, A., Kumar, A., & Mittal, N. (2023). Impact of firm and country-specific factors on profitability: A study of selected IT companies in India. South Asian Journal of Management, 30(2), 44-70. https://www.proquest.com/scholarly-journals/impact-firm-country-specific-factors-on/docview/2852033226/se-2
Hassan, M. K., Aysan, A. F., Kayani, U. N., & Choudhury, T. (2023). Working capital as a firm performance savior? Evidence from Scandinavian countries, Research in International Business and Finance, 65, 1-16. https://doi.org/10.1016/j.ribaf.2023.101959
Hong, S-J., Farris, M. T. Pohlen, T. L., & Idug, Y. (2023) Exploring the impact of working capital in the U.S. aviation industry for profitability and shareholder value. Transport Policy, 144, 90-101. https://doi.org/10.1016/j.tranpol.2023.10.006
Irawan, D. C., Pulungan, N. A., Subiyanto, B., & Awaludin, D. T. (2022). The effect of capital structure, firm size, and firm growth on profitability and firm value: Acces la success. Calitatea, 23(187), 52-57. https://doi.org/10.47750/QAS/23.187.06
Kamlesh, K., Sivasankaran, N., Prasenjit, C., & Giridhar, R. (2023). Working capital management efficiency, cash holdings, and market value of Indian listed firms. International Journal of Business and Economics, 22(1), 53-83. https://www.proquest.com/scholarly-journals/working-capital-management-efficiency-cash/docview/2920677465/se-2
Kwon, T. H., Bae, S. C., & Park, S. H. (2021). The interactions of corporate sales growth and diversification strategy: Cross-country evidence. Journal of International Financial Markets, Institutions and Money, 75, https://doi.org/10.1016/j.intfin.2021.101422
Le, B. (2019). Working capital management and firm’s valuation, profitability and risk: Evidence from a developing market. International Journal of Managerial Finance, 15(2), 191-204. https://doi.org/10.1108/IJMF-01-2018-0012
Lee, C. C. (2023). Analyses of the operating performance of information service companies based on indicators of financial statements. Asia Pacific Management Review, 28(4), 410-419, https://doi.org/10.1016/j.apmrv.2023.01.002.
Mahmood, F., Han, D., Ali, N., Mubeen, R., & Shahzad, U. (2019). Moderating effects of firm size and leverage on the working capital Finance–Profitability relationship: Evidence from china. Sustainability, 11(7). https://doi.org/10.3390/su11072029
Makni, M. S. (2023). Analyzing the impact of COVID-19 on the performance of listed firms in Saudi market. Technological Forecasting and Social Change, 187, https://doi.org/10.1016/j.techfore.2022.122171
Oh, K., Jeong, E., & Yoo, H. (2023). Effects of working capital management on small and medium-sized enterprises' profitability from the continuity of supply chain relationships. Global Business & Finance Review, 28(5), 51-66. https://doi.org/10.17549/gbfr.2023.28.5.51
Pardanawati, S. L. (2021). Effect of working capital turnover, leverage and sales growth on profitability of consumption industry companies in IDX. Annals of the Romanian Society for Cell Biology, 25(6), 5770-5781. https://www.proquest.com/scholarly-journals/effect-working-capital-turnover-leverage-sales/docview/2599947326/se-2
Rachmawati, R., & Sherlita, E. (2021). Effect of sales growth, firm size, profitability on earning per share. Turkish Journal of Computer and Mathematics Education, 12(8), 675-679. https://www.proquest.com/scholarly-journals/effect-sales-growth-firm-size-profitability-on/docview/2623460210/se-2
Rey-Ares, L., Fernández-López, S., & Rodeiro-Pazos, D. (2021). Impact of working capital management on profitability for Spanish fish canning companies. Marine Policy, 130, 1-10. https://doi.org/10.1016/j.marpol.2021.104583
Siam Commercial Bank. (2020, May 12). Business opportunities after the COVID-19 perspective from BCG, a global consulting firm [SCB TV] https://www.scb.co.th/en/personal-banking/stories/business-maker/business-opportunity-after-covid.html
Suksanguan, W., Chotkunakitti, P., Tripattanasit, P., & Kobkanjanapued, Y. (2022). The Impact of COVID-19 Pandemic Crisis on Profitability Ratio of Hotels and Resorts in Thailand. Journal of Multidisciplinary in Humanities and Social Sciences, 5(4), 1583-1600.
https://so04.tci-thaijo.org/index.php/jmhs1_s/article/view/260657
Tarkom, A. (2022). Impact of COVID-19 exposure on working capital management: The moderating effect of investment opportunities and government incentives. Finance Research Letters, 47(B), 1-8. https://doi.org/10.1016/j.frl.2021.102666
Thi, Q. V., & Ngo, N. C. (2023). Does working capital management matter? A comparative case between consumer goods firms and construction firms in Vietnam. Cogent Business & Management, 10(3), 1-23. https://doi.org/10.1080/23311975.2023.2271543
Tiwari, S. C., Sayyad, M., Azam, M. S., & Sudesh, N. S. (2023). Determinants of WCM of indian listed firms: A GMM regression approach. Cogent Economics & Finance, 11(1). https://doi.org/10.1080/23322039.2023.2199550
Zheng, X., Zhou, Y., & Iqbal, S. (2022). Working capital management of SMEs in COVID-19: role of managerial personality traits and overconfidence behavior. Economic Analysis and Policy, 76, 439-451. https://doi.org/10.1016/j.eap.2022.08.006