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| Field |
Value |
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| Title |
Determinants of Working Capital Requirements: Evidence from Selected Non-financial Firms Listed on the Johannesburg Securities Exchange
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| Creator |
Oseifuah, Emmanuel; University of Venda
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| Subject |
Johannesburg Securities Exchange, Non-financial firms, South Africa, Working Capital Management.
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| Description |
WorkingCapital is an important aspect of corporate financial management because itaffects profitability, liquidity and firm value (Smith, 1973; Deloof, 2003;Nazir and Afza, 2008). For this reason, firms try to keep an optimal (desirable)level of working capital that maximizes their value. In essence, workingcapital management is vital for the survival of businesses, regardless of theirsize. Previous studies suggest thatworking capital requirement of an enterprise is influenced by numerous factorssuch as firm size, GDP growth rate, inflation, foreign exchange rates, amongothers. The study analysed the key endogenous (internal) and exogenous (external) factorsinfluencing working capital requirements and WCM of a sample of 5 large non-financialfirms listed on the JSE. Data for the study was collected using asemi-structured questionnaire. The result revealed that sales growth, capitalexpenditure and debtors’ management are the three most important endogenous factorsinfluencing working capital requirement of the sampled firms. Other factors identifiedare inventory ordering efficiency, board requirements, centralization ofsupply, operating expenditure and products offered. The study further revealed thatinterest rates, foreign exchange rate, economic growth and inflation rate are thefour key exogenous factors influencing working capital requirements of thesampled firms. Additionally, 40% of the sampled firms indicate that salesaffect WCM to a very high extent while 60% indicate that capital expenditureaffect WCM to a high extent. Finally, 60% indicate that debtors’ terms affectWCM to a high extent. 60% of respondents indicate that economic growth someextent to a very high extent affect WCM while 80% indicate that interest ratesaffects WCM from to some extent to a high extent. 20% are of the view thatexchange rates affect WCM to a very high extent.
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| Publisher |
The Journal of Accounting and Management
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| Contributor |
—
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| Date |
2016-06-03
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| Type |
Peer-reviewed Article
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| Format |
application/pdf
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| Identifier |
http://journals.univ-danubius.ro/index.php/jam/article/view/3200
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| Source |
The Journal of Accounting and Management; Vol 6, No 1 (2016): JAM
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| Language |
en
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| Relation |
http://journals.univ-danubius.ro/index.php/jam/article/download/3200/11130
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| Rights |
The author fully assumes the content originality and the holograph signature makes him responsible in case of trial.
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