The DOI matches its Crossref record.
Effect of inventory management on financial performance of listed manufacturing companies in Sri Lanka
Open accessAbstract
Inventories are essential assets of a company's production process. In order to prevent losses resulting from stock deficits and surpluses, control of such inventories is useful. The aim of this paper is to analyse the effect on financial performance of inventory management measured in terms of inventory conversion time and inventory turnover measured in terms of return on assets, cash flow from operations and market value added of listed manufacturing companies in Sri Lanka. A conceptual framework is designed to represent direct and indirect relationships among these constructs. This study adopted a quantitative research approach. Secondary data was collected for a period from 2014 to 2018 using published annual reports of Listed manufacturing Companies in the Colombo Stock Exchange, Sri Lanka. The sample size included 29 manufacturing companies and the sample was selected through the judgmental sampling technique. Results of this study show that inventory conversion period has a significant negative relationship on return on assets, cash flow from operations and market value added of a firm. Thus, lower the time taken to convert inventories to sales, higher the financial performance vice versa. However, the results indicate that inventory turnover is insignificantly related to financial performance of manufacturing companies in Sri Lanka. It is expected that the model further improves the knowledge on understanding the importance of inventory management on financial performance of a company. It could be valuable to the managers of a company to identify their role in managing inventories.
Overview
The claims and statistics of this paper haven’t been checked yet.
Run the check — free, no account needed. It reads the open-access text and checks the sources it cites.
Integrity signals
Registry
Cites
Statistics
Verification
Claims the paper makes
The claims and statistics of this paper haven’t been checked yet.
Run the check — free, no account needed. It reads the open-access text and checks the sources it cites.
Claims other papers make about this one
Each is checked against this paper’s own text: does it say what the citing paper says it does?
The cited source says what the claim attributes to it.
In the citing paper
“In fact, the profitability related to the inventory policies can vary according to the industry specific and economic conditions at the country level [32].”
From Inventory Turnover and Firm Profitability: A Saudi Arabian Investigation (2023) · cites this paper as [32]
Self-check
Percentages, sums and reported differences re-computed from the paper’s own numbers.
The self-check needs the paper’s full text.
Citations
Cites
No references could be resolved yet.
Research works printed but not linked: 15
- Mwangi, W. and M.T. Nyambura. “The Role of Inventory Management on Performance of Food Processing Companies: A Case Study of Crown Foods Limited Kenya.” European Journal of Business and Social Science, 2015.
- Shardeo, V. “Impact of Inventory Management on the Financial Performance of the Firm.” IOSR Journal of Business and Management, 2015.
- Karim, N. et al. “Inventory Management Effectiveness of a Manufacturing Company – Malaysian Evidence.” International Journal of Law and Management, 2018.
- Anshur, A.S. et al. “The Role of Inventory Management on Financial Performance in Some Selected Manufacturing Companies in Mogadishu.” International Journal of Accounting Research, 2018.
- Akindipe, O. “Inventory Management – A Tool for Optimal Use of Resources and Overall Efficiency in Manufacturing SMEs.” Journal of Entrepreneurship Management and Innovation (JEMI), vol. 10, no. 4, 2014.
- Lwiki, T. et al. “The Impact of Inventory Management Practices on Financial Performance of Sugar Manufacturing Firms in Kenya.” International Journal of Business, Humanities and Technology, 2013.
- Stanger, S.H. et al. “What Drives Perishable Inventory Management Performance? Lessons Learnt from the UK Blood Supply Chain.” Supply Chain Management: An International Journal, 2012.
- Leachman, C. et al. “Manufacturing Performance: Evaluation and Determinants.” International Journal of Operations & Production Management, vol. 25, no. 9, 2005, pp. 851–874.
- Shah, R. and H. Shin. “Relationship among Information Technology, Inventory and Profitability: An Investigation of Level Invariance Using Sector Level Data.” Journal of Operations Management, 2007.
- Mathuva, D.M. “The Influence of Working Capital Management Components on Corporate Profitability: A Survey of Kenyan Listed Firms.” Research Journal of Business Management, 2010.
- Shin, S. et al. “Effect of Inventory Management Efficiency on Profitability: Current Evidence from the U.S. Manufacturing Industry.” Journal of Economics and Economic Education Research, 2015.
- Folinas, D. and C.Y. Shen. “Exploring Links among Inventory and Financial Performance in the Agricultural Machinery Industry.” International Journal of Food and Agricultural Economics, 2014.
- Altan, M. and G. Sekeroglu. “The Relationship between Inventory Management and Profitability: A Comparative Research on Turkish Firms Operated in Weaving Industry, Eatables Industry, Wholesale and Retail Industry.” International Journal of Mechanical and Industrial Engineering, 2014.
- Sunday, O. and E. Joseph. “Inventory Management and SMEs Profitability: A Study of Furniture Manufacturing, Wholesale and Eatery Industry in Delta State, Nigeria.” Journal of Finance and Accounting, 2017.
- Sitienei, E. and F. Memba. “The Effect of Inventory Management on Profitability of Cement Manufacturing Companies in Kenya: A Case Study of Listed Cement Manufacturing Companies in Kenya.” International Journal of Management and Commerce Innovations, 2015.
Cited by
Sorted by citations
Inventory Turnover and Firm Profitability: A Saudi Arabian Investigation
Alnaim, M., & Kouaib, A. (2023) · Processes · doi:10.3390/pr11030716 · Cited by 29
Metadata
- Authors
- Rodrigo, W. L. M. P. U., Rathnayake, R. M. S. S., & Pathirawasam, C.
- Venue
- IAR Journal of Business Management
- Published
- 2020-11-30
- Volume
- 01
- Issue
- 02
- Pages
- 1-6
- ISSN
- 2708-5139 (ISSN-L)
- 2708-5147
- OpenAlex
- W4413294022
- Cited by
- 2
- References
- 0
- Citations by year
- 2024: 1 · 2023: 1
- FWCI
- 0.47
- Type
- journal article
- Language
- en
- Open access
- hybrid
- doi.org
- Licence
- cc-by
- Locations
- IAR Journal of Business Management (publishedVersion, cc-by)
- 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 › Business, Management and Accounting › Accounting › Financial Analysis and Corporate Governance
- Keywords
- inventory management, financial performance, inventory conversion period, inventory turnover, return on assets, operating cash flow, market value added, manufacturing companies, listed companies, Sri Lanka
About these checks
Registry, retraction, Cites and statistics results are computed, not judged, with one exception: a printed reference that no index lists is read once by a model before it counts as a citation error. Claims are extracted by a model and kept only when their quote appears verbatim in the text; each cited source is then checked, with a model’s help, for whether it says what the claim relies on. Those verdicts can be wrong — read the claim’s quote and the cited source before relying on one.
Statistics and arithmetic are recomputed, not judged.
Confidence bands are shown only for fields calibrated on our annotated test set. None is calibrated yet, so no band is shown.
What counts as a claim ›How we measure confidence ›How we check this ›
Are you an author, or do you see a problem with this page? Request a review
