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Cited by 10Working Capital and Financial PerformanceSupply Chain and Inventory ManagementCorporate Finance and Governance

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Firm Performance of Saudi Manufacturers: Does the Management of Cash Conversion Cycle Components Matter?

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Kouaib, Amel, Bu Haya, Mohammed Ibrahim·2024·Journal of Risk and Financial Management
DOI 10.3390/jrfm17010016
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Abstract

The purpose of this study is to examine the liquidity management of a corporation. It aims to examine how managing cash conversion cycle components affects corporate performance. A dataset of 88 firms listed on the Saudi Stock Exchange between 2018 and 2022 was analyzed using both pooled OLS and fixed effects regression models. A sample of 84 firms listed on the Saudi Stock Exchange for the period from 2018 to 2022 was used. Both the pooled OLS and the fixed effects regression models were used. This study’s key findings are: (1) there is a strong negative correlation between the time it takes to convert inventory into sales (inventory conversion period) and firm performance. If inventory does not sell quickly, profit tends to be lower. (2) Firm performance demonstrates a strong inverse relationship with the duration it takes for companies to collect cash from customers, commonly known as the accounts receivable collection period. A short accounts receivable collection period may become collectible and increase a business’s profitability and performance. (3) There is a highly significant negative link between the time taken to pay creditors (days payable outstanding) and firm performance. A short average payment period, indicated by a low payment period, suggests that the firm is promptly settling its bills and obligations without any delays.

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Metadata

Authors
Kouaib, A., & Bu Haya, M. I.
Affiliations
  • King Faisal University (SA)
  • Accounting Department, School of Business, King Faisal University, Al-Ahsa 31982, Saudi Arabia
Corresponding author
Kouaib, Amel
ORCID
Kouaib, Amel
Venue
Journal of Risk and Financial Management
Publisher
MDPI AG
Published
2024-01-01
Volume
17
Issue
1
Pages
16
ISSN
  • 1911-8066 (ISSN-L)
  • 1911-8074
DOI
10.3390/jrfm17010016
OpenAlex
W4390523582
Cited by
10
References
43
Citations by year
2026: 6 · 2025: 2 · 2024: 2
FWCI
9.94
Type
journal article
Language
en
Open access
Licence
Locations
  • Journal of risk and financial management (publishedVersion, cc-by)
  • RePEc: Research Papers in Economics (submittedVersion)
Funders
Deanship of Scientific Research, Vice Presidency for Graduate Studies (4713)
Topics
  • Social Sciences › Business, Management and Accounting › Accounting › Working Capital and Financial Performance
  • Social Sciences › Decision Sciences › Management Science and Operations Research › Supply Chain and Inventory Management
  • Social Sciences › Economics, Econometrics and Finance › Finance › Corporate Finance and Governance
Keywords
cash conversion cycle, firm performance, liquidity management, inventory conversion period, accounts receivable collection period, days payable outstanding

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