Impact of Working Capital Management Policies on Corporate Performance—An Empirical Study

This paper empirically analyzes the impact of liquidity risk on key financial performance aspects of Islamic banks in the UAE. To document the association between liquidity risk and other performance ratios, time series data are taken for full-fledged Islamic banks working in the UAE from 2000 to 2014. Liquidity ratios and capital adequacy ratios, profitability ratios, and tangibility ratios are determined. Correlation and regression analyses are used to test the study hypotheses using SPSS. The findings indicate that capital adequacy and tangibility ratios are the main factors to determine liquidity risk of UAE Islamic banks. Furthermore, the results showed that the size of Islamic banks’ assets and capital adequacy had a positive and significant association with liquidity risk. Policymakers and Islamic finance experts should devote more attention to enhancing the base of Islamic finance assets to manage liquidity issues.

The aims of study were to know and analyze the performance of Bank Syariah BUMN in Indonesia seen in the concept of Balance Scorecard, especially financial perspective and compare financial performance. This study was a descriptive study that explains a picture of a particular object and result. This study described the performance appraisal results from the financial perspective of Bank Syariah Mandiri, BNI Syariah, BRI Syariah in 2016. The type of data used in this study were secondary data in the form of financial data of Bank Syariah Mandiri, BNI Syariah, BRI Syariah, which has been published year 2016. The data source is obtained from Indonesian Banking Directory published by Bank Indonesia, from the Indonesia Stock Exchange website. Methods of data analysis used descriptive analysis. Based on the performance analysis of Balancae Score Card with financial perspective, it can be concluded that BRI Syariah, BNI Syariah and Bank Mandiri Syariah has a good performance in 2016. Capital ratio, Earning Assets Quality (KAP) Ratio, Profitability Ratio (earnings), Liquidity Ratio (liquidity) and Sensitivity to market risk in BRI Syariah pertained good. Capital Ratio (Capital), Earning Asset Quality (KAP) Ratios, Profitability Ratio (earnings), Liquidity Ratio (liquidity) and Sensitivity to Market Risk (BNI Syariah) were good. Capital Ratio (Capital), Earning Asset Quality (KAP) Ratios, Profitability Ratios (earnings), Liquidity Ratio (liquidity) and Sensitivity to market risk in Bank Syariah Mandiri were good. Based on the comparison of capital ratio, earning asset ratio, liquidity ratio and sensitivity to market risk in Bank Syariah Mandiri, BNI Syariah and BRI Syariah, in general the largest ratio were the ratio of BRI Syariah except capital ratio, both BNI Syariah except liquidity ratio and except market sensitivity.

Purpose: The influence of Capital Adequacy Ratio (CAR), Non-Performing Loan (NPL), Operational Costs and Operational Income (OCOI), Net Interest Margin (NIM), and Loan to Deposit Ratio (LDR) on the Profitability Ratio (ROA) in Bank Groups based on Core Capital (KBMI) 4 from 2019 to 2023. Methodology/approach: Quantitative research approach was used. The type of data used in this study is secondary data, with a population consisting of the Bank Group Based on Core Capital (KBMI) 4 listed on the Indonesia Stock Exchange (IDX) from 2021 to 2023. Results/findings: The results of this study indicate that the Capital Adequacy Ratio (CAR) has a positive effect on Return On Assets (ROA), Operating Costs Operating Income (OCOI) has a negative effect on Return On Assets (ROA), Net Interest Margin (NIM) has a positive effect on Return On Assets (ROA), Loan to Deposit Ratio (LDR) has a positive effect on Return On Assets (ROA), on the other hand Non Performing Loan (NPL) has no effect on Return On Assets (R OA). Conclusions: This study finds that CAR, NIM, and LDR positively and significantly affect ROA, whereas BOPO has a negative and significant impact. The NPL showed no significant effect. Overall, 96% of the ROA variation in KBMI 4 banks from 2019 to 2023 is explained by these financial variables, highlighting their strong influence on profitability during economic uncertainty. Limitations: This study is limited to the financial performance ratios used, and the results provided are focused on KBMI 4 banking companies in Indonesia only. Contribution: This study can be used as a literature reference for further research, especially research on the influence of bank health levels on profitability (ROA) Bank Groups based on Core Capital (KBMI) 4 in Indonesia.

This research was conducted to examine the effect of variable Capital Adequacy Ratio (CAR), Non-Performing Financing (NPF), Operating Expenses Operating Income (BOPO), and Financing to Deposit Ratio (FDR) of Profitability (ROA). Profitability is used to measure the effectiveness of management based on results generated from the loan repayment and investment. The ratio is important for the bank's profitability is Return On Assets (ROA). Financial ratios that affect the ROA is the CAR, NPF, BOPO, and FDR. The sampling technique used was purposive sampling with the criteria of Islamic commercial bank serving the financial statements of the period December 2006-September 2010. The analysis technique used is the classical assumption of the analysis, multiple regression analysis and hypothesis test with a level of significance of 5%. The results of the research simultaneously (test F) states that the CAR, NPF, BOPO, and FDR jointly affect the profitability (ROA) of banks. While the results show that the correlation coefficient between profitability (ROA) of banks with 4 independent variables of 73.9%. And the result of research partially (t) states that the variable CAR and FDR did not have a significant positive effect on profitability (ROA) of banks. And variable BOPO NPF and significant negative effect on profitability (ROA) of banks.

<em>The purpose of this study is to examine and analyze the effect of financial ratios analyzed in this study are asset adequacy ratios, non-performing loans, and profitability ratios using the Capital Adequacy Ratio (CAR), Non Performing Loan variables (NPL), Net Interest Margin (NIM), Loan to Deposit Ratio (LDR) and Return On Assets (ROA) in banking companies listed on the IDX for the 2016 - 2018 period. This study's population were all banking companies listed on the IDX for the 2016– 2018 period. The sampling method used was purposive sampling with a sample size of 40 banking companies. This analysis tool has used multiple linear regression. The results of these study are NIM has a positive effect on ROA, NPL has a negative effect on ROA, while CAR and LDR have no effect on ROA in banking companies listed on the IDX for the 2016 - 2018 period.</em>

Despite the importance of managing the working capital effectively, research on this area is still meagre. The company has an option to either adopt a conservative or aggressive working capital management policy. However, what drives them to either use conservative or aggressive working capital policy remains unclear. By segregating into conservative and aggressive working capital management, the study provides better insight as to the motives for companies to do so. Thus, this paper intends to examine the driving factors leading companies in the Trading and Services sector to adopt conservative and aggressive working capital policies. Using secondary data, the study runs panel regression models over seven years from 2001 until 2017 on the companies of the trading and service sector. The identified independent variables are age, free cash flow, growth rate, leverage, profitability and size. Empirically findings reveal that all the identified independent variables are the determinants for adopting conservative working capital investment policy (CWCIP). Only leverage appears to affect the working capital management policies and is negatively related. In essence, there appear to be no specific dominant factors affecting the companies to adopt conservative or aggressive working capital investment and financing policy. Furthermore, it seems that the trading and services companies practice a targeted conservative/aggressive investment and financing policies since the lagged dependent variables are positive and statistically significant. This paper extends the existing growing but dearth literature on the determinants of working capital investment and financing policies. In addition, the results may be of interest to managers who are interested to understand the rationale for adopting a specific working capital policy. Future research should investigate the impact of working capital investment and financing policies on company performance and firm values. In addition, more research could be done to examine whether the industry effect influences the adoption of working capital investment and financing policies taken.

This study aims to analyse the influence of Non-Performing Financing (NPF), Capital Adequacy Ratio (CAR), and Financing Deposit Ratio (FDR) on Financing Murabahah-Based with Third-Party Fund as a Moderator 2015 – 2022. This study uses three variables that encompass independent variable, dependent variable, and moderation variable. Independent variables consist of Non-Performing Financing (NPF), Capital Adequacy Ratio (CAR), and Financing Deposit Ratio (FDR), dependent variable consists of Financing Murabahah-Based, and moderation variable consists of Third-Party Fund that will subsequently be analysed with Moderated Regression Analysis (MRA) by comparing the R-square Value before and after the tally include and exclude the moderation variable in the statistical measurement. The data used in this study were monthly data from January 2015 until January 2022. The research method that was used in this study was descriptive quantitative analyse by using linear regression analysis through path analysis which was processed by using E-Views 10. The results of this study show that Non-Performing Financing (NPF) and Financing Deposit Ratio (FDR) influence negatively and significantly Financing Murabahah-Based, Capital Adequacy Ratio (CAR) influences positively and significantly on Financing Murabahah-Based, and Third-Party Fund moderates the relationship between Non-Performing Financing (NPF) and Financing Murabahah-Based, Capital Adequacy Ratio (CAR) and Financing Murabahah-Based, and Financing Deposit Ratio (FDR) and Financing Murabahah-Based.

This studyaims to examine the influence of bank size, third party funds, capital adequacy ratio, and loan to deposit ratio to lending. The samples of this research are the bank firms listed in BEI (Indonesia Stock Exchange) in 2011-2015. The Samples are collected using purposive sampling method and resulted 29 companies become the final samples. Data were collected from financial report or annual report, then data analyzed by multiple linier regression analysis. The results of this research show that (1) bank size, third party funds, capital adequacy ratio, and loan to deposit ratio simultaneously have influence for lending, (2) bank size has positive influence for lending, (3) , third party funds has positive influence for lending, (4) capital adequacy ratio has no influence for lending, and (5) loan to deposit ratio has positive influence for lending.

The objectives of this research is to analyze the effect of Capital Adequacy Ratio (CAR), Non Performing Loan (NPL) and Loan to Deposit Ratio (LDR) toward Return on Asset (ROA) which is as a proxy of Profitability Banking Firms. The research method used is the method of verification. The type of data used are secondary data. The number of the target population in this study were 27 banking companies listed in Indonesia Stock Exchange (IDX) 2012-2016. The analysis technique used is a statistical test with a multiple regression analysis and hypothesis testing using the F test and t test, which had previously been performed classical assumption first. The results showed that CAR, NPL and LDR simultaneously had a significant effect on return on assets, whereas based on partial test (t) it was concluded that CAR and LDR variable had no effect on ROA while NPL variable had significant negative effect to ROA.

Aims: The main aim of the study is to identify whether working capital management has an impact on firm’s profitability of listed companies in Sri Lanka.
 Place and Duration of Study: Pooled panel data of 95 listed companies from 18 sectors are listed on the Colombo Stock Exchange (CSE) which comprised of 475 observations is used during the period of 2012/2013 to 2016/2017.
 Methodology: Descriptive statistics, Pearson’s Correlation analysis, ANOVA, and Pooled Regression analysis were employed as measures of analysis. Working capital management components and working capital policies are used as independent variables which comprised of number of days of account receivable (DAR), number of days of inventories (DI), number of days of account payables (DAP), cash conversion cycle (CCC), working capital investment policies (WCIP), and working capital financing policies (WCFP). Current ratio (CR), firm size (SIZE), sales growth (GROWTH), and Debt ratio (DR) were employed as controlled variables. Gross operating profit (GOP) and Return on assets (ROA) were used as dependent variable.
 Results: In the descriptive statistics, average of DAR, DI, DAP, and CCC are 64, 63, 97, and 29 days respectively. The average WCIP and WCFP are indicated as 40% and 27% of total assets. For control variables, the average CR, SIZE, GROWTH, and DR are indicated as 2.27, 14.50, 33% and 40%. In the Pearson correlation analysis, CCC has negative relationship with GOP and ROA. With regard to WCIP and WCFP, there are negative significant relationships with GOP and ROA. Regression analysis states that working capital management significantly impacts on firm’s profitability of listed companies in Sri Lanka.
 Conclusion: These findings would be useful to consider on maintaining optimal working capital management components and policies to avoid corporate collapse and to maximize firm’s profitability.

Liquidity management is one of the essential determinants of firms’ market value because it directly affects the profitability. This study investigates the impact of Liquidity management on profitability of joint venture commercial banks in Nepal. The objective of the study is to identify the relationship between the Liquidity management and profitability and its impact on profitability. The relation between the Liquidity management and profitability is examined using Descriptive statistic, Pearson correlation analyses and the effects on profitability is found out using the regression analyses by using a sample of 3 annual financial statements of joint venture commercial Banks in Nepal. The Liquidity management represents the variables of the Current Reserve Ratio (CRR), Credit Deposit Ratio (CDR), Capital Adequacy Ratio (CAR) and the profitability including return on equity (ROA)). The result revealed that the CDR is positively correlated with ROA while, CRR and CAR are inversely correlated with ROA. Thus, it could be concluded that CDR and CAR has significant impact on profitability and CRR has insignificant effect on Profitability of joint venture commercial banks in Nepal.

This study investigates the factors that affect Moody's credit ratings of commercial banks using an ordered probit model. We propose an empirical model designed to forecast bank credit ratings using quantitative publicly available information from their financial statements. The sample consists of 13 Jordanian commercial banks over the period (2000-2013). The study estimates a forecasted credit rating of the banks investigated based on the proposed model. The results show that profitability ratios, asset quality ratios, liquidity ratios, capital adequacy ratios and the size of the bank have statistically significant effects on the banks credit ratings.These results have important implications to banks’ customers, investors, management and the regulatory authority.

Profitability is the ratio which links the profit from sales and investment. From the profitability ratio,the stakeholder and shareholder can see and understand the level of company profitability. This study has purpose to determine the effect of Capital Adequacy Ratio / CAR, Loan To Deposit Ratio / LDR, Non Performing Loans / NPL towards banking companies listed on the Indonesian stock exchange with time period of 2016-2018. In this research, researchers used sampling method which is a purposive sampling method. Samples that meet the criteria in this study are 16 banks for the time period of 2016-2018. The type of research used in this study is quantitative research. The results of this study indicate that the Capital Adequacy Ratio / CAR has a significant effect on profitability, Non Performing Loans / NPL do not have a significant effect on profitability, while the Loan To Deposit Ratio / LDR has no significant effect on profitability. Keywords: CAR; NPL; LDR; Profitability

In the light of the fact that non-performing assets (NPAs) in the country are increasing at a very fast pace, this article intends to investigate the outcome of gross NPAs (GNAPs) ratio on profitability, liquidity and solvency in Indian banking system. To study this impact, we have used panel data of 30 Indian banks (12 government sector banks and 18 private sector banks) from 2014 to 2021 (8 years) collected from Prowess (CMIE) and money control. The current study uses four different panel regression models, that is, fixed and panel regression models, pooled regression models and seemingly unrelated regression models. The empirical outcomes of the current study confirm the outcomes of existing studies. The findings of this article confirm the substantial association between the GNPA ratio and profitability ratio, that is, net profit ratio, return on assets ratio and return on equity ratio. Further, the study also confirms the association between the GNPA ratio and liquidity ratios of banks (cash flow margin, current ratio, acid test ratio, cash ratio and operating cash flow ratio). We also found the impact of the GNPA ratio on the capital adequacy ratio.

يهدف البحث إلى تقييم ومقارنة مستوى الأداء المالي لعينة من البنوك التجارية في اليمن وذلك باستخدام متوسطات النسب المالية (السيولة، الربحية ،المديونية، كفاية رأس المال)، وقد أُجري البحث على أربعة بنوك تجارية منها: بنكان حكوميان، وهما (البنك الأهلي اليمني وبنك التسليف التعاوني والزراعي) وبنكان قطاع خاص، وهما( بنك اليمن الدولي وبنك اليمن والكويت للتجارة والاستثمار) خلال المدة (2020-2016م) واُستخدام المنهج الوصفي التحليلي من خلال الاعتماد على القوائم المالية للبنوك محل الدراسة مع الاستعانة ببعض الأدوات الإحصائية كالوسط الحسابي، والانحراف المعياري. وتوصل البحث إلى نتيجة مفادها أنّ البنوك التجارية الحكومية كان أداؤها أفضل في نسب السيولة، والمديونية، وكفاية رأس المال، بينما البنوك التجارية الخاصة حققت أداء أفضل في نسب الربحية وبشكل عام فإن البنوك التجارية اليمنية (عينة البحث) لا تتمتع بمستوى أداء مالي جيد خلال المدة المدروسة بالرغم من ارتفاع نسب السيولة وكفاية رأس المال وذلك لانخفاض نسب الربحية وارتفاع نسب المديونية والمخاطر في تلك البنوك. الكلمات المفتاحية: البنوك التجارية، تقييم الأداء المالي، القوائم المالية، النسب المالية. Abstract The research aims to evaluate and compare the level of financial performance of a sample of commercial banks in Yemen, using average financial ratios (liquidity, profitability, debt, capital adequacy). The research was conducted on four commercial banks including two governmental banks, namely (the National Bank of Yemen and the Cooperative and Agricultural Credit Bank) and two private sector banks, namely (the International Bank of Yemen and the Bank of Yemen and Kuwait for Trade and Investment) during the period (2016-2020 AD). The descriptive analytical approach was used by relying on the financial statements of the banks under study with the help of some statistical tools such as the arithmetic mean and standard deviation. The research concluded that governmental commercial banks had better performance in terms of liquidity and debt ratios, and capital adequacy, while private commercial banks achieved better performance in profitability ratios. In general, Yemeni commercial banks (the research sample) do not have a good level of financial performance during the period studied despite the high equity and capital adequacy ratios. This is due to low profitability ratios, high debt and risk ratios in these banks. Keywords: commercial banks, financial performance evaluation, financial statements, financial ratios.