Record Details

THE WORKING CAPITAL MANAGEMENT ON FINANCIALLY CONSTRAINED FIRM

Business and Finance Journal

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Field Value
 
Title THE WORKING CAPITAL MANAGEMENT ON FINANCIALLY CONSTRAINED FIRM
 
Creator Nareswari, Ninditya
Nurmasari, Nuraini Desty
 
Subject financial constraints
firm performance
working capital management
 
Description Working capital management is a daily activity that will determine the availability of resources for the company. There are positive and negative effects in increasing the degree of working capital. There is an optimal degree as well. The degree of optimal working capital for each company is different, depends on financial conditions. This paper aims to examine the effect of non-linear working capital on firm performance and analyze the differences in the degree of optimal working capital between financially constrained and unconstrained firms. Data were obtained from OSIRIS with the observation period 2010-2019. Working capital is proxied by the net trade cycle. This study uses panel data regression models, i.e. fixed effect regression and random effect regression. The result of this study shows that working capital has a non-linear effect (U-shaped inverted) on firm performance when using ROA and ROE as a proxy for performance which means the company has an optimal degree of working capital. The result also shows that financially constrained firms grouped based on cash flow, interest coverage, and cost of external financing have lower optimal working capital which means that the benefits of working capital are more used by non-financially constrained firms.
 
Publisher UNUSA Press
 
Date 2021-11-01
 
Type info:eu-repo/semantics/article
info:eu-repo/semantics/publishedVersion
Peer-reviewed Article
 
Format application/pdf
 
Identifier https://journal2.unusa.ac.id/index.php/BFJ/article/view/1970
10.33086/bfj.v6i2.1970
 
Source Business and Finance Journal; Vol. 6 No. 2 (2021): Business and Finance Journal; 127-134
Jurnal Bisnis dan Keuangan; Vol 6 No 2 (2021): Business and Finance Journal; 127-134
2477-393X
2527-4872
10.33086/bfj.v6i2
 
Language eng
 
Relation https://journal2.unusa.ac.id/index.php/BFJ/article/view/1970/1513
 
Rights Copyright (c) 2021 Ninditya Nareswari, Nuraini Desty Nurmasari
https://creativecommons.org/licenses/by-sa/4.0