- The experimental results show that the Cash Conversion Cycle (CCC) and all components including the Account Receivables Turnover in Days (ARD), the Inventory Turnover in Days (INVD) and the Account Payables Turnover in Days (APD) have the negative effects on the ROA. - In addition, the CCC, the ARD, and the APD have same effects on the TQ. - In addition, this study has also found the impact of the Leverage, and the Sale size on the ROA and the TQ.. - the WCM has a significant role because it affects the bussiness profitability and liquidation of the firm. - Therefore, the key target of the WCM is to control the short-term financing resource to make the compatibility between the profitability and the risk of the companies (Ricci &. - in the many other times and areas lead to more different results and the conclusion is unidentified. - In the subsequent period the Vietnamese economy is facing many difficulties due to internal problems of the economy and the impact of the global economic recession. - For this reason, the author continuously investigates the impact of the WCM on the profilability of the industrial enterprises for the 8-year period after the world economic crisis. - Therefore, the objective of this paper is to examine effects of WCM on firm profitability of the industrial enterprises. - Most of the traditional studies between WCM and profitability show that decreasing the WCM will have. - The CCC is the period from the expenditure of the firm’s cash for the purchase of raw materials to manufacture the finished goods and the collection of cash from the sale of the finished goods. - The results of the investigation showed the negative association between Gross operating income and the accounts receivable days, the inventory days and the accounts payable days. - The study showed the opposite effect between the CCC and the gross operating profit. - Research results found the statistically significant affects between the average receivables period and firm size on the ROA.. - The results demonstrate that firms can increase gross operating profit by shortening the ARD and the CCC. - (2013) investigated the impact of the WCM on the ROA of small and medium enterprises in Pakistan for the period 2006-2012. - (2014) used the Odinary Least Square method (OLS), the Fixed Effects model (FEM) and the Generalized Method of Moment (GMM) to test the relationship between WCM and profitability of 208 non-financial companies listed on the HOSE and the HNX in many economic sectors such as construction, real estate, transportation… The results showed that effective WCM by shortening the collection period and inventory period would increase the profitability of firms. - Bui Ngoc Toan (2016) used a sample of 35 real estate firms listed on the Vietnam stock Exchange over a five-year period from 2010-2014 to test the impact of the working capital policy on the ROA. - Independent and dependent variables include the CCC and the all components of the CCC (including the ARD, the INVD and the APD) and firm profitability (including the ROA and Tobin’s Q).. - position and the Statement of Income are from www.hsx.vn. - Hypothesis 1a: There is no relationship between the ARD and the ROA.. - Hypothesis 1b: There is no relationship between the ARD and the TQ.. - Hypothesis 2a: There is no relationship between the INVD and the ROA Hypothesis 2b: There is no relationship between the INVD and the TQ.. - Hypothesis 3a: There is no relationship between the APD and the ROA.. - Hypothesis 3b: There is no relationship between the APD and the TQ.. - Hypothesis 4a: There is no relationship between the CCC and the ROA.. - Hypothesis 4b: There is no relationship between the CCC and the TQ.. - Since the null hypothesis of the Hausman test is rejected (P-value <. - 0.05), we concluded that the REM is inconsistent and the FEM is preferred and vice versa.. - Dependent variables including the ROA and the TQ are used to measure respectively the book value and market value of profitability. - the highest ROA is 13.1% and the lowest ROA is -10.2%. - the highest TQ is 3.58 and the lowest TQ is 0.27.. - Independent variables including The CCC, the ARD, the INVD and the APD are used to measure the WCM. - The ROA is negatively impacted by independent variables including the ARD, the INVD, the APD, and the CCC, respectively and 0.231. - TQ is also negatively impacted by the CCC, the ARD, the INVD, and the APD, respectively and 0.151. - This suggests that in order to increase the ROA and the TQ, enterprises need to reduce the collection time, inventory time and payment time.. - The results of the correlation analysis are largely consistent with the theory and results of previous studies.. - In relationship between the ROA and other variables, the results of Hausman test have P-value >. - 5%, thus accepting the null hypothesis and the selected REM model. - 5%, thus rejecting the null hypothesis and the selected FEM model. - Table 4: The relationship between the ARD and the ROA (Model 1a) Dependent variables. - Table 4 presents the relationship between the ARD and the ROA by three models:. - The results show the significant and negative effects of the ROA with the ARD, the FS and LEV. - Meanwhile, it has the significant and positive impacts between the ROA and the Sale size (Ln(sale. - However, there are no relationship of the ROA with the SG and the CR.. - The control variables FS has the significant and opposite effects at 1% significance level on the ROA in OLS and GMM method, respectively, 0.0058 and 0.0051. - also the significant and opposite effects at 1% significance level on the ROA in OLS, REM and GMM method, respectively and 0.0573. - But the Sale size (Ln(sale)) has the significance and positive effects at 1% significance level on the ROA in OLS and GMM method, respectively, 0.0068 and 0.0056.. - Table 5: The relationship between the ARD and the TQ (Model 1b). - Table 5 presents the relationship between the ARD and the TQ by three models: OLS, FEM and GMM. - The results show the significant and negative effects of the TQ with the ARD, and the LEV. - Meanwhile, it has the significant and positive impacts between the TQ and the Sale size (Ln(sale. - However, there are no relationship of the ROA with the FS, the SG and the CR.. - significance level on the TQ in OLS, FEM and GMM models, respectively and 0.1352. - Table 6: The relationship between the INVD and the ROA (Model 2a). - Table 6 presents the relationship between the INVD and the ROA by three models:. - The results show the significant and negative effects of the ROA with the INVD, the FS and LEV. - However, there is no relationship of the ROA with the CR.. - The INVD and the ROA have the statistically significant and negative effect by OLS and GMM models, respectively, with a coefficient of 0.00002(Significance at 10% level) and 0.00003 (Significance at 5% level). - The relationship between the ROA and other variables seems to be similar to models 1a, in models 2a, the impacts of the FS on the ROA, the LEV on the ROA, and Sale size on the ROA is same with model 1a. - The SG has the positive impacts on the ROA in OLS and REM models, respectively, 0.0063 and 0.0082.. - Table 7: The relationship between the INVD and the TQ (Model 2b) Dependent Variables TQ OLS Hausman test. - Table 7 presents the relationship between the INVD and the TQ by three models:. - The results show the significant effects of the ROA with the LEV and the Sale size. - However, there is no relationship of the ROA with the INVD, the FS, the SG and the CR.. - significance level on the TQ in OLS, FEM and GMM models, respectively and 0.1566. - Table 8: The relationship between the APD and the ROA (Model 3a) Dependent Variables ROA OLS Hausman test. - Table 8 presents the relationship between the APD and the ROA by three models:. - The control variables FS has the significant and opposite effects at 1% significance level on the ROA in OLS and GMM models, respectively, 0.0068 and 0.0058. - The SG has the opposite effects on the ROA in OLS and FEM models, respectively, 0.0057 (significance at 10% level) and 0.0072 (significance at 1% level). - The LEV has also the significant and opposite effects at 1% significance level on the ROA in OLS, REM and GMM models, respectively and 0.0538. - But the Sale size (Ln(sale)) has the positive effects at 1% significance level on the ROA in OLS and GMM models, respectively, 0.0087 and 0.0076.. - Table 9: The relationship between the APD and the TQ (Model 3b). - Table 9 presents the relationship between the APD and the TQ by three models: OLS, FEM and GMM. - The results show the significant and negative effects of the TQ with the. - APD, and the LEV. - significance level on the TQ in OLS, FEM and GMM models, respectively and 0.1574. - Table 10: The relationship between the CCC and the ROA (Model 4a) Dependent Variables. - Table 10 presents the relationship between the CCC and the ROA by three models: OLS, REM and GMM. - The results show the significant and negative effects of the ROA with the CCC, the FS. - However, there are no relationship of the ROA with the LEV and the CR.. - This shows that the shorter the time of the CCC, the higher the profitability of a business.. - The control variables FS has the negative effects on the ROA in OLS and GMM method, respectively, 0.0056 (significance at 1% level) and 0.0046 (significance at 5%. - The SG has also the negative effects at on the ROA in only OLS and REM method, respectively, 0.0058 (significance at 10% level) and 0.0082 (significance at 1% level). - But the Sale size (Ln(sale)) has the positive effects at 1% significance level on the ROA in GMM method with the coefficient of 0.0064.. - Table 11: The relationship between the CCC and the TQ (Model 4b). - Table 11 presents the relationship between the CCC and the TQ by three models:. - The results show the negative effects of the TQ with the CCC.. - However, there are no relationship of the ROA with the SG, the CR and the LEV.. - It means that the reduction of the CCC help the profitability of company to increase. - Thirdly, the INVD only has the negative and significant impact with the ROA. - (2012) works, group of authors used TQ as market value of profitability and the results for TQ were insignificant. - Within the framework of this paper, eight models are implemented to test the impacts of the WCM on the firm profitability of 44 industrial enterprises listed on the HOSE in the period from 2010 to 2017. - Research results show the impacts of the WCM on firm profitability including book value (the ROA) and market value (the TQ). - In addition, the investigation also finds the impact of the LEV, the Sale size on the ROA and the TQ. - It means that the optimization of the CCC, which includes (1) shortening the time to collect from customers, (2) accelerate inventory flow and (3) reduce the payment time to suppliers. - It means that the manager needs to predict the cash inflow and cash outflow that based on the characteristic of business period, seasonal and the business development plan in each period. - So, forecasting the demand for WCM in general and the demand for cash in particular is very important, because it will help businesses proactively in the process of production and business, maintain the solvency, take advantage timely opportunities as well as reduced opportunity costs due to excessive cash reserves.. - Bui, Thu Hien., Nguyeen, Hoai Nam., The relationship between the working capital management and the profitability of the food – baberage firms listed in the Vietnam stock market. - The relatioship between the worrking capital management and the profitability: Experimental evidence in Vietnam.
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