Considering that inventories feature as a significant cost component, especially in retail companies, inventory management requires particular attention. Various tracking indicators are used, with the turnover ratio being one of the most common. This article focuses on inventory turnover ratio determinants of Serbian large and medium sized enterprises registered solely for trading in fast moving consumer goods. Based on the gathered data, the authors analysed its relation to gross margin, capital intensity and sales growth rate. The results have shown that the inventory turnover ratio correlates positively with sales growth rate and gross margin, whereas its correlation to capital intensity is not statistically significant. Retailers’ approach to business operations and decision making on delivery of orders, reflecting the decline in the average inventory level, feature as the fundamental reasons for establishing a positive correlation between inventory turnover ratio and sales growth rate. On the other hand, the reasons for the positive correlation between inventory turnover and gross margin can be found in the characteristics of the retail market in the Republic of Serbia regarding the concentration levels and market share of the leading retailers. In addition to application by retail managers, the obtained results can also be used as a basis for future research related to inventory analysis of the Serbian retail sector.
Business companies may face a number of speculative financial risks. Successful in every firms based on how they manage the financial risks that are exposures to lose or profit. This study issue to identify the liquidity, a macroeconomic phenomenon and inventory turnover in KUB Malaysia Sdn Bhd. This study was according to 5 years period from year 2011 to 2015. The data were taken from annual report that are listed in Bursa Malaysia. Liquidity ratios and inventory turnover ratio are measured by using certain formulae. We can see the significantly between quick ratio and inventory turnover in descriptive results. A higher value of quick ratio indicates a higher degree of liquidity. (Ali, 2005) found that liquidity adds to number of disappointment in Islamic banks and ordinary banks alike in spite of having admittance to outer liquidity of traditional banks. Thus, a higher value of inventory ratio indicates that inventory can be sold and replaced more frequently. The data was conducted by using regression and bivariate correlation.
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Abstract: A question arise, is there any impact of different packet sizes on consumer buying pattern. The study is focus on retailers and wholesaler perspective in Pakistan context. There are 75 respondents were include in research and handed over them a questionnaire having questions regarding with selling pattern of four different packet sizes (i.e. sachet, quarter pack, half pack and full pack) that formulated data of 300 observations (75*4) and asked them about to buy stock on monthly basis. Data converted from monthly basis to yearly basis in order to compose it into inventory turnover. Simple linier regression (OLS-Model) has been used in analyzing data. It was assumed that there is negative impact of packet size on inventory turnover. Several test has been applied on data include (Test of Sufficiency, Test for Significance and Test for Specification). Result matched with hypothesis and negative impact has been shown that represent that with reducing packet size, inventory turnover increases. Beside this it also shows that mostly people in recent context prefer to buy more sachet or quarter pack as compare to half pack and full pack.
huge contrasts in the stock places of organizations under examination. A converse relationship is seen between stock days and the money related execution proportions viable which is somewhat bolstered by the relapse work. Curiously, critical outcomes couldn't be acquired for every one of the organizations under examination. The discoveries have strategy suggestions as the measures could be actualized for improving the stock position and in this manner the money related execution by the retailers. WU.X AND SARAH M. RYAN, (2014), ―Joint optimization of asset and inventory management in a product–service system‖, uses and integrated model with an objective to reduce the total cost of the system by formulating the couplings between two subsystems. Also presents an algorithm to optimize the inventory management policy and replacement policy jointly. Sebastian Steinkera, Mario Peschb and Kai Hoberga (2016) ―Inventory management under financial distress: an empirical analysis‖ analysed firms on the quarterly basis for their performance. It uses the inventory days and Altmans‘ Z score consisting of working capital asset ratio, retained earnings asset ratio, EBIT asset ratio, equity value and sales asset ratio. Altmans‘ Z score is used to find the distressed firms. Suggests that inventory reduction is positively correlated with extreme asset reductions and cost cutting strategies in turnaround situations, but we generally argue that short-term inventory reductions are valuable strategic options in times of severe financial distress. Inventory adjustments are promising turnaround options because they provide cash inflows and likely increase the efficiency of a distressed firm‘s supply chain. Distressed firms are advised to evaluate their inventory performance
In this study profitability will be measured by using retum on assets (ROA). High profitability will be able to support operational activities maximally. High and low profitability is influenced by many factors such as working capital. In conducting its operational activities every company will membutubkan potential resources, one of which is capital, both working capital such as cash, accounts receivable, inventory and fixed capital such as fixed assets. Capital is a major problem that will support the company's operational activities in order to achieve its goals (Bramasto, 2008). Measurement of the company's financial performance with the overall ROA of its assets to generate profit. ROA (Retum on Asset) is the ratio of net profit after tax to assess how much the return of assets owned by the company. Negative ROA due to corporate profits in negative conditions as well or loss. This shows the ability of the capital.
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The first assumption H1 implies that a systematic change of quality perceptions through the coffee supply chain does exist. The results show that there is indeed a difference in quality perceptions through the coffee supply chain between producers and distributors. Results showed that the correlation with the I-distance of Component 3 for the distributor is 0.679, that essentially proves that this component is the most important for the distributor. This component encompasses following set of quality characteristics: coffee inventory turnover ratio (an inventory turnover ratio measures the number of units dispensed in relation to the average unit inventory, Sorooshian et al., 2013), producer satisfaction with the distributor’s services, and customer satisfaction (retail) with the distributor’s
Abstract — This article has the purposde to realize the Kruskal- Wallis non-oparametric test on a historical series of consumption of the most important items of a multinational company in the oil and gas sector. The objective of this paper is to check if there is seasonality in its demand, thus offering a more adherent forecasting a model for each one of them. The company mentioned has a inventory estimated at US $ 17,500,000.00. There was collected a consumption data from March 2014 to March 2016, and from the binomial composed of the ABC classification and the inventory turnover, items were selected as Class A and as high turnover. It is known that an inventory with low turnover directly impacts on the operating costs of any company. Thus, one needs to analyze the demand behavior for each item, to propose a forecasting model, and therefore establish an inventory policy. Such inventory, as much as possible, should be streamlined, since it enables continuing operations. Given the high value of stored items, the accuracy of the used demand forecasting models plays a key role in the financial health of the company, starting from a leaner structure, one can focus on other domestic sectors, thus establishing a competitive advantage.
Abstract: The purpose of this study is to find out the effect of working capital management on company profitability. The study aims at examining the statistical significance between company’s working capital management and profitability. In light of this objective the study adopts quantitative approaches to test a series of research hypotheses. A sample of three (3) manufacturing companies listed on the Dar es Salaam Stock Exchange (DSE) is used for a period of ten years (2002-2012) with the total of 30 observations. Data is analyzed on quantitative basis using Pearson’s correlation and Regression analysis (Ordinary Least Square). The key findings from the study are; Firstly, there exists a positive relationship between cash conversion cycle and profitability of the firm. This means that as the cash conversion cycle increases it will lead to an increase in profitability of the firm, and managers can create a positive value for the shareholders by increasing the cash conversion cycle to a reasonable level; Secondly, there is a negative relationship between liquidity and profitability showing that as liquidity decreases, the profitability also increases; Thirdly, there exists a highly significant negative relationship between average collection period and profitability indicating that a decrease in the number of days a firm receives payment from sales affects the profitability of the firm positively; Fourthly, there is a highly significant positive relationship between average payment period and profitability. This implies that the longer a firm takes to pay its creditors, the more profitable it is.; and Fifthly, there exists a highly significant negative relationship between inventory turnover in days and profitability hinting that firms which maintain sufficiently low inventory levels reduce the cost of storing the inventory which results to higher profitability.
Technological improvements have changed the business practices of retailers. Advances in computing, both hardware and software, have turned inventory management into the science of timing the flow of merchandise, reducing inventory quantities to a minimum, and increasing inventory turnover. Electronic banking has undoubtedly affected cash management. For example, credit card purchases by customers result in near-immediate cash inflows. Firms are able to pay invoices on their due date while maintaining smaller cash balances and maximizing discount opportunities. Have these changes significantly affected the inventory turnover ratio, current ratio and other measures of liquidity as well their interrelationships? Researchers and financial analysts should logically ask if the retail sector taxonomy of financial ratios regarding cash position and liquidity are the same as that established 35 years ago.
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Abstract—In this paper, we develop a performance evaluation model to assess business performance in the Taiwan electronic industry. In order to select better performance indices, we adopt literature review, expert’s questionnaire, and factor analysis-principal component analysis. Through two-stage expert meeting and questionnaires, we collect, discuss, and evaluate all the indictors. 16 out of 28 indices are selected. The 16 indictors are further divided into two levels and 4 categories depended on Analytic Hierarchy Process method and principal component analysis. Based on the result of factor analysis, there are four factors (i.e., categories) named as (1) Profitability Ability-return on assets, return on stockholders’ equity, return on investment, and net profit margin, (2) Efficiency Ability- average collection period, accounts receivable turnover, inventory turnover, working capital, and (3) Liquidity- current ratio, quick ratio, and cash ratio. Additionally, the non-financial 5 indices are included as the fourth factor. Consequently, there are four factors with 16 indices to process the AHP method to determine the weight of each index for measuring business performance. Finally, the result of business performance evaluation is presented and some suggestions are given to middle or top managers for conducting business.
Licensed under Creative Common Page 413 Table 2 depicts that inventory turnover days has a positive correlation of 0.36 with profitability of quoted bottling companies in Nigeria, while account receivable days and account payable day are negatively correlated with profitability with correlations of 0.14 and 0.06 respectively. Cash conversion cycle is 0.117 positively correlated with profitability. Due to the fact that making payments to suppliers, collecting payments from customers earlier and keeping inventories in stock for lesser time are associated with increase in profitability. A negative relationship between account payable days and return on asset further suggests that the quoted companies wait longer to pay their account payable. Delaying payments to suppliers allows a company to assess the quantity and quality of the products bought and can be an inexpensive and flexible source of financing for a companies. The negative correlation between account receivable days and return on asset implies that longer collection period decreases profitability. Granting trade credits favours the companies‟ sales in various ways. Trade credit can act as an effective price cut. It is an incentive for customers to acquire merchandise at times of low demand. It allows customers to check that the merchandise they receive is as agreed (quantity and quality) and to ensure that the services contracted are carried out (Smith, 1980). However, firms that invest heavily in inventory and trade credit can suffer reduced profitability. In addition, larger inventory reduces the risk of a stock out.
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This study was aimed to analyze company financial performance before and after merger or acquisition. Financial performance was measured using Current Ratio (CR), Debt to Equity Ratio (DER), Total Assets Turnover (TATO), Inventory Turnover (ITO), Operating Profit Margin (OPM), Return on Assets (ROA), Return on Equity (ROE), while corporate value was measured using Price to Book Value (PBV). This study was limited to manufacturing industry issuers which had merged and acquisited between 2003 and 2011. Sample was collected using purposive sampling method and there were 11 companies. Data analysis was statistic parametric analysis using paired sample t-test. Study result found that CR, DER, TATO, ITO, OPM, ROA, ROE, and PBV after merger and acquisition was better than before merger and acquisition, even ROA and ROE showed significant improvement.
The regression result shows the significant level (p value) of F statistics. Show that Influence of R on Return on Assets in Large size of the FMCG industry. The result of ANOVA is 25.838 at 1/3 degree of freedom and 5% Level of significant revelling that Return on Assets Influence current ratio, inventory turnover ratio, debtors turnover ratio, in select large FMCG sector. The table indicates the regression models predict dependent variable significantly because P value 0.143 is more than 0.05. So our Null Hypothesis is accepted and alternate Hypothesis is rejected.
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For the process of measuring efficiency in distribution channels, different models are used. A large number of different indicators describe mentioned processes. As input indicators in this paper are used: employees, time of activities realization, equipment, order picking transactions, warehouse overtime, electricity costs, other energy costs, costs of packaging materials, inventories, number of pallet places, vehicles, fuel consumption, driver overtime, maintenance costs, ordering costs and unloading costs (Table 1). On the other side seventeen output indicators are used: number of deliveries, realized demands, inventory turnover, warehouse space utilization, failures in different sectors, distance driven, vehicle space utilization, vehicle, time utilization, turnover, packaged units, transported pallets, ordering speed, unloading speed (Table 2). The values are normalized values proposed in Andrejić (2015).
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Column 2 show the results of the relationship between economic policy un- certainty and the efficiency of enterprise inventory management. The core ex- planatory variable economic policy uncertainty (EPU) coefficient is significantly positive at the 1% significance level, indicating that the increase in economic policy uncertainty (EPU) will make inventory management less efficient. Re- flecting the economic policy uncertainty (EPU) will make company’s estimation of inventory demand more challenging, resulting in an increase in inventory turnover (DIH). Cash flow (CFO), return on assets (ROA), proportion of fixed assets (FA), sales growth (SALEGROWTH) are significantly negatively corre- lated, indicating that companies with high growth ability, high profitability in production and operation and good cash flow quality can manage inventory more effectively. Fixed assets investment has crowded out the working capital investment of enterprises, which makes the company improve its inventory turnover efficiency under the financing constraints. The empirical results are consistent with Hypothesis 2, the uncertainty of economic policy will reduce the efficiency of enterprise inventory turnover management.
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Short term financing decisions are important financing decisions in the domain of a finance manager. A wrong decision in this regards will not only affect the ability of the business to pay obligations on time, also known as liquidity position of the business but also the ability of the business to earn profit, also known profitability of the business. Hence, working capital decisions affect both liquidity and profitability position of the business. Working capital management implies managing the current assets and current liabilities of the business optimally. In this paper, an attempt is made to study how the working capital management affects the overall profitability of the business by taking an example of a leading company from oil and refinery sector in India, which is Oil and Natural Gas Corporation ( ONGC). The study takes into account the some of the important working capital ratios like current ratio, quick ratio, working capital ratio, inventory turnover ratio, debtor turnover ratio, working capital to total assets ratio and how each one of them affect the profitability of the business which measured in terms of PBD divided by Owner’s equity. The study is based on the data of five years from 2010-11 to 2014-15.
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Table 3 shows the results of multiple linear regression. The value of adjusted R square is 0.337 which means 33.7 percent variation in ROCE is explained by current ratio, debtors turnover ratio, and inventory turnover ratio and rest of the variation (1-R 2 ) is an unexplained variation. ROCE is dependent variable whereas current ratio, debtors turnover ratio, inventory turnover ratio are independent variables. ROCE is the dependent variable whereas current ratio, debtors turnover ratio, and inventory turnover ratio are the independent variables. Firstly, current ratio has positive impact on ROCE since the unstandardized beta coefficient is 0.09245. It indicates that for every one unit change in current ratio, there will be 0.092 unit change in ROCE. However, its regression coefficient is statistically insignificant at 5% level of significance (P>0.05). Secondly, the unstandardized beta coefficient of debtors’ turnover ratio is 0.05637 which indicates that one unit change in debtors’ turnover ratio will bring 0.05 unit change in ROCE. Further, its regression coefficient is statistically insignificant at 5% level of significance (P>0.05). Thirdly, inventory turnover ratio (ITR) has significant positive relationship with return on capital employed at 5% level of significance. The unstandardized beta coefficient value of inventory turnover ratio is 0.01458
Materials Management is related to planning, procuring, storing and providing the appropriate material of right quality, right quantity at right place in right time so as to co-ordinate and schedule the production activity in an integrative way for an industrial undertaking. Inventory Management is simply the process by which an organization is supplied with the goods and services that it needs to achieve its objectives of buying, storage and movement of materials. Inventory is seen as incurring costs, or waste, instead of adding and storing value, contrary to traditional accounting. Just in time (JIT) is a production strategy that strives to improve a business' return on investment by reducing in-process inventory and associated carrying costs.
Porter-Steers Met Expectation model is the adjustment of Vroom's Expectancy hypothesis (Long et al., 2012). Met desire model proposes met desires as an essential determinant in turnover choices. Met desires are characterised as the complexity between what a man experiences at work and what he anticipated that would experience (Porter and Steer, 1973). Met desire display verbalises that when a person's desires whatever they are, are not met, his proclivity to pull back would increment. As a rule, the level of occupation fulfilment mirrored the extending level of met specialist desires. The game plan of wants a man has of a business may fuse motivations, improvement, and relations with partners and administrators. Unambiguously, rejected needs make disappointment and likely reason the turnover choice (Porter and Steers, 1973) by a man. Porter and Steers delineated three shared components that depict inspiration. The three denominators are a) what engages human direct; b) what arranges or channels, for example, lead, and c) how this direct is kept up and overseen. Doorman and steers see the basic building squares of a model of motivation join necessities or wants, direct, goals, and some info (Long et al., 2012).
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Observational techniques are also common in exploratory and descriptive research, where the observation condition can be either naturalistic or contrived, and where the researcher has the option simply to observe, or to participate and observe at the same time. According to Ghauri and Gronhaug (2005), observation as data collection technique entails both listening to and watching other people’s behaviour in way that allows some type of learning and analytical interpretation. The main advantage of this technique is that researchers can collect first-hand information in a natural setting. In participant or field observation, the observer is considered a natural part of the situation or event. The researcher is often part of a company or organisation and decides to study a particular phenomenon within that organisation. It is also an important aspect of observation that the process should be planned systematically in direct relation to the research question or the relevant unit of analysis. In the context of this research, participant observation was deemed to be an appropriate data collection technique in relation to providing information in relation to the unit of analysis that focuses on the interaction between the different functions within the supply chain and decision makers in achieving optimal inventory levels.
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