This study empirically examines the relation between profitability and liquidity, as measured by current ratio and cash gap (cash conversion cycle) on a sample of joint stock companies in Saudi Arabia. Using correlation and regression analysis the study found significant negative relation between the firm’s profitability and its liquidity level, as measured by current ratio. This relationship is more evident in firms with high current ratios and longer cash conversion cycles. At the industry level, however, the study found that the cash conversion cycle or the cash gap is of more importance as a measure of liquidity than current ratio that affects profitability. The size variable is also found to have significant effect on profitability at the industry level. Finally, the results are stable over the period under study.
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[Show abstract][Hide abstract] ABSTRACT: Assessment of groundwater quality is of utmost significance in arid regions like Saudi Arabia where the lack of present-day recharge and high evaporation rates coupled with increasing groundwater withdrawal may restrict its usage for domestic or agricultural purposes. In the present study, groundwater samples collected from agricultural farms in Hail (15 samples), Al Jawf (15 samples), and Tabuk (30 samples) regions were analyzed for their major ion concentration. The objective of the study was to determine the groundwater facies, the main hydrochemical process governing the groundwater chemistry, the saturation index with respect to the principal mineral phases, and the suitability of the groundwater for irrigational use. The groundwater samples fall within the Ca-Cl type, mixed Ca-Mg-Cl type, and Na-Cl type. Evaporation and reverse ion exchange appear to be the major processes controlling the groundwater chemistry though reverse ion exchange process is the more dominating factor. The various ionic relationships confirmed the reverse ion exchange process where the Ca and Mg in the aquifer matrix have been replaced by Na at favorable exchange sites. This phenomenon has accounted for the dominance of Ca and Mg ions over Na ion at all the sites. The process of reverse ion exchange was further substantiated by the use of modified Piper diagram (Chadha's classification) and the chloro-alkaline indices. Evaporation as a result of extreme aridity has resulted in the groundwater being oversaturated with aragonite/calcite and dolomite as revealed by the saturation indices. The groundwater samples were classified as safe (less than 10) in terms of sodium adsorption ratio (SAR) values, good (less than 1.25) in terms of residual sodium carbonate (RSC) values, and safe to moderate (between 0 and 3) in terms of Mg hazard for irrigation purposes. Though the high salinity groundwater in the three regions coupled with low SAR values are good for the soil structure, it can have a negative impact on the crop production by adversely affecting the crop physiology. Cultivation of high-salinity-resistant varieties of crops is recommended for maximum agricultural productivity.
"As mentioned in the first section of the paper, the Association of Corporate Treasurers indicated liquidity management as a fundamental function of corporate treasury, addressing the context of trade-off between liquidity and profitability (this problem is addressed among others in: Eljelly, 2004, pp. 48-61; García-Teruel, Martínez-Solano, 2007, pp. "
[Show abstract][Hide abstract] ABSTRACT: The paper discusses the problem of the importance of corporate treasury function in liquidity management, with particular focus on cash management. The aim of the study is to support a thes is that corporate treasury has potential to enhance innovative actions due to the expert knowledge and the deep understanding of the functioning of a particular company. By providing an overview of corporate treasury development, objectives and functions, the paper indicates the prime importance of liquidity management function and in this context describes the specifics of cash management actions. Further, by addressing the contemporary challenges of corporate treasury, the paper addresses the prime innovations in cash management, including state-of-the-art settlement techniques, information channeling systems, new ways of investing cash surpluses and managing risk.
"Efficient liquidity management requires current assets and liabilities managed in such a way so that the risk of the inability to meet due short-term obligations is eliminated while avoiding excessive investment in current assets (Eljelly, 2004) and this ultimately depends on its effect on firm profitability. Most studies, such as by "
[Show abstract][Hide abstract] ABSTRACT: Purpose
This study examines the relationship between working capital efficiency and firm value and the influence of financing constraints on this relationship.
Data from 192 firms spanning a period of 10 years (1999 - 2008) are used for this purpose and analyzed using the OLS regression technique.
The study finds that improvements in working capital efficiency through reduction in working capital investment results in higher firm value. However, this relationship is influenced by the financing constraints faced by a firm. For financially constrained firms, working capital efficiency significantly increases firm value but it is found to be insignificant for unconstrained firms.
To the author's knowledge, this is the first study on the value of working capital in Malaysia or in any emerging market. Most studies on working capital valuation concentrate on developed countries and that too are only a handful. Hence this study contributes to the scarce literature on the valuation of working capital. This study also uses the model by Fama and French (1998) to evaluate the relationship between working capital and firm value, which has hardly been used in studies on working capital valuation.
International Journal of Managerial Finance 02/2015; 11(1). DOI:10.1108/IJMF-01-2013-0016