IDEAS home Printed from https://ideas.repec.org/a/hur/ijaraf/v7y2017i1p11-17.html
   My bibliography  Save this article

Working Capital Determinants for the UK Pharmaceutical Companies Listed on FTSE 350 Index

Author

Listed:
  • Mubashir Qurashi
  • Muhammad Zahoor

Abstract

The study is conducted to investigate working capital determinants for the UK Pharmaceutical companies that are the constituents of FTSE 350 index. Secondary data is collected through annual reports and DataStream database for the UK Pharmaceutical firms since 2009 to 2014. Panel data method is used and OLS is employed as an estimation tool. Working capital is the dependent variable while firm size, profitability, leverage, operating cycle, growth and level of economic activity are independent variable. The result of multiple regression show highly significant results. Working capital is negatively linked with firm size while positively linked with growth and level of economic activity for UK Pharmaceutical firms. Furthermore, insignificant results of working capital with operating cycle, profitability and leverage are observed.

Suggested Citation

  • Mubashir Qurashi & Muhammad Zahoor, 2017. "Working Capital Determinants for the UK Pharmaceutical Companies Listed on FTSE 350 Index," International Journal of Academic Research in Accounting, Finance and Management Sciences, Human Resource Management Academic Research Society, International Journal of Academic Research in Accounting, Finance and Management Sciences, vol. 7(1), pages 11-17, January.
    • Handle: RePEc:hur:ijaraf:v:7:y:2017:i:1:p:11-17
    as

    Download full text from publisher

    File URL: http://hrmars.com/hrmars_papers/Article_02_Working_Capital_Determinants1.pdf
    Download Restriction: no
    File URL: http://hrmars.com/hrmars_papers/Article_02_Working_Capital_Determinants1.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Nicholas Wilson & Barbara Summers, 2002. "Trade Credit Terms Offered by Small Firms: Survey Evidence and Empirical Analysis," Journal of Business Finance & Accounting, Wiley Blackwell, vol. 29(3&4), pages 317-351.
    2. Heitor Almeida & Murillo Campello & Michael S. Weisbach, 2004. "The Cash Flow Sensitivity of Cash," Journal of Finance, American Finance Association, vol. 59(4), pages 1777-1804, August.
    3. Marc Deloof, 2003. "Does Working Capital Management Affect Profitability of Belgian Firms?," Journal of Business Finance & Accounting, Wiley Blackwell, vol. 30(3‐4), pages 573-588, April.
    4. Marc Deloof, 2003. "Does Working Capital Management Affect Profitability of Belgian Firms?," Journal of Business Finance & Accounting, Wiley Blackwell, vol. 30(3-4), pages 573-588.
    5. Richard Pike & Nam Sang Cheng, 2001. "Credit Management: An Examination of Policy Choices, Practices and Late Payment in UK Companies," Journal of Business Finance & Accounting, Wiley Blackwell, vol. 28(7&8), pages 1013-1042.
    6. Kenneth P. Nunn Jr., 1981. "The Strategic Determinants Of Working Capital: A Product-Line Perspective," Journal of Financial Research, Southern Finance Association;Southwestern Finance Association, vol. 4(3), pages 207-219, September.
    7. Paul, Salima & Boden, Rebecca, 2008. "The secret life of UK trade credit supply: Setting a new research agenda," The British Accounting Review, Elsevier, vol. 40(3), pages 272-281.
    8. Aaronson, Daniel & Bostic, Raphael W. & Huck, Paul & Townsend, Robert, 2004. "Supplier relationships and small business use of trade credit," Journal of Urban Economics, Elsevier, vol. 55(1), pages 46-67, January.
    9. Morris Lamberson, 1995. "Changes in Working Capital of Small Firms in Relation to Changes in Economic Activity," American Journal of Business, Emerald Group Publishing, vol. 10(2), pages 45-50.
    10. Sonia Baños‐Caballero & Pedro J. García‐Teruel & Pedro Martínez‐Solano, 2010. "Working capital management in SMEs," Accounting and Finance, Accounting and Finance Association of Australia and New Zealand, vol. 50(3), pages 511-527, September.
    11. Nicholas Wilson & Barbara Summers, 2002. "Trade Credit Terms Offered by Small Firms: Survey Evidence and Empirical Analysis," Journal of Business Finance & Accounting, Wiley Blackwell, vol. 29(3‐4), pages 317-351, April.
    12. Richard Pike & Nam Sang Cheng, 2001. "Credit Management: An Examination of Policy Choices, Practices and Late Payment in UK Companies," Journal of Business Finance & Accounting, Wiley Blackwell, vol. 28(7‐8), pages 1013-1042, September.
    13. Nor Edi Azhar Binti Mohamad & Siti Balqis Elias, 2013. "An Assessment on Determinant of Working Capital Management from Malaysian Public Listed Companies," International Journal of Academic Research in Accounting, Finance and Management Sciences, Human Resource Management Academic Research Society, International Journal of Academic Research in Accounting, Finance and Management Sciences, vol. 3(4), pages 224-228, October.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Mohsin Siraj & Muhammad Mubeen & Salman Sarwat, 2019. "Working capital management and firm performance: evidence from non-financial firms in Pakistan," Asian Journal of Empirical Research, Asian Economic and Social Society, vol. 9(2), pages 27-37, February.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Cristina Martínez-Sola & Pedro García-Teruel & Pedro Martínez-Solano, 2014. "Trade credit and SME profitability," Small Business Economics, Springer, vol. 42(3), pages 561-577, March.
    2. Afrifa, Godfred Adjapong & Gyapong, Ernest & Monem, Reza M., 2018. "Product differentiation, market dynamics and the value relevance of trade payables: Evidence from UK listed firms," Journal of Contemporary Accounting and Economics, Elsevier, vol. 14(3), pages 235-253.
    3. H. Kent Baker & Debidutta Pattnaik & Satish Kumar, 2022. "Trade credit and firm profitability: Empirical evidence from India," International Journal of Finance & Economics, John Wiley & Sons, Ltd., vol. 27(4), pages 3934-3953, October.
    4. Isaac Kwame Essien Obeng, 2016. "Delaying payments after the financial crisis: evidence from EU companies," MENDELU Working Papers in Business and Economics 2016-66, Mendel University in Brno, Faculty of Business and Economics.
    5. Paul, Salima & Boden, Rebecca, 2008. "The secret life of UK trade credit supply: Setting a new research agenda," The British Accounting Review, Elsevier, vol. 40(3), pages 272-281.
    6. Chauhan, Gaurav Singh, 2019. "Are working capital decisions truly short-term in nature?," Journal of Business Research, Elsevier, vol. 99(C), pages 238-253.
    7. Théo Nicolas, 2022. "Short-term financial constraints and SMEs’ investment decision: evidence from the working capital channel," Small Business Economics, Springer, vol. 58(4), pages 1885-1914, April.
    8. Padachi Kesseven D & Carole Howorth, 2014. "Focus on working capital management practices among Mauritian SMEs: Survey evidence and empirical analysis," E3 Journal of Business Management and Economics., E3 Journals, vol. 5(4), pages 097-108.
    9. Tarek Ibrahim Eldomiaty & Mohamed Hashem Rashwan & Mohamed Bahaa El Din & Waleed Tayel, 2016. "Firm, industry and economic determinants of working capital at risk," International Journal of Financial Engineering (IJFE), World Scientific Publishing Co. Pte. Ltd., vol. 3(04), pages 1-29, December.
    10. Belinda L. Del Gaudio & Gabriele Sampagnaro & Claudio Porzio & Vincenzo Verdoliva, 2022. "The signaling role of trade credit in bank lending decisions: Evidence from small and medium‐sized enterprises," Journal of Business Finance & Accounting, Wiley Blackwell, vol. 49(1-2), pages 327-354, January.
    11. Aktas, Nihat & Croci, Ettore & Petmezas, Dimitris, 2015. "Is working capital management value-enhancing? Evidence from firm performance and investments," Journal of Corporate Finance, Elsevier, vol. 30(C), pages 98-113.
    12. Paweł Mielcarz & Dmytro Osiichuk & Paweł Wnuczak, 2018. "Working Capital Management through the Business Cycle: Evidence from the Corporate Sector in Poland," Contemporary Economics, University of Economics and Human Sciences in Warsaw., vol. 12(2), June.
    13. Giuseppe Marotta, 2005. "When do trade credit discounts matter? Evidence from Italian firm-level data," Applied Economics, Taylor & Francis Journals, vol. 37(4), pages 403-416.
    14. Mohsin Siraj & Muhammad Mubeen & Salman Sarwat, 2019. "Working capital management and firm performance: evidence from non-financial firms in Pakistan," Asian Journal of Empirical Research, Asian Economic and Social Society, vol. 9(2), pages 27-37, February.
    15. Julia Koralun-Bereźnicka, 2014. "On the Relative Importance of Corporate Working Capital Determinants: Findings from the EU Countries," Contemporary Economics, University of Economics and Human Sciences in Warsaw., vol. 8(4), December.
    16. Vivien Lefebvre, 2023. "Trade credit, payment duration, and SMEs’ growth in the European Union," International Entrepreneurship and Management Journal, Springer, vol. 19(3), pages 1313-1340, September.
    17. Zainudin Nasruddin & Regupathi Angappan, 2010. "Manufacturing SMEs' Credit Collection Period and its Determinants: Some Evidence from Malaysia," Folia Oeconomica Stetinensia, Sciendo, vol. 9(1), pages 83-104, January.
    18. Woo Sung Kim, 2016. "Determinants of Corporate Trade Credit: An Empirical Study on Korean Firms," International Journal of Economics and Financial Issues, Econjournals, vol. 6(2), pages 414-419.
    19. ABDIEV Jamol & AKALIN Gurkan, 2019. "A Close Look Into Supplier Policy Changes In Response To Their Buyers' Financial Stress," Studies in Business and Economics, Lucian Blaga University of Sibiu, Faculty of Economic Sciences, vol. 14(1), pages 5-16, April.
    20. Vivien Lefebvre, 2020. "Performance, working capital management, and the liability of smallness: A question of opportunity costs?," Post-Print hal-02968569, HAL.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:hur:ijaraf:v:7:y:2017:i:1:p:11-17. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Hassan Danial Aslam (email available below). General contact details of provider: http://hrmars.com/index.php/pages/detail/Accounting-Finance-Journal .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.