Working capital management and financial performance: an empirical study of the South African Retail sector

Abstract

The main aim of the study was to determine the relationship between working capital management and the financial performance of South African retail firms listed on the Johannesburg Stock Exchange. The study examined the effect of working capital management on the financial performance of 14 South African retail firms for the period 2010–2019. Panel data techniques, namely pooled ordinary least squares, fixed effects, and random effects estimators were employed to test the relationship between working capital management and financial performance. Working capital management was proxied by average age of inventory, average collection period, average payment period and cash conversion cycle, while financial performance was proxied by net operating profit margin (NOPM), return on assets (ROA) and return on equity. The first objective was to determine the relationship between average age of inventory and the financial performance of South African retail firms. The second objective was to ascertain whether average collection period had an influence on the financial performance of the South African retail firms. The third objective was to determine whether average payment period had an influence on the financial performance of the South African retail firms. The fourth objective was to test whether the cash conversion cycle had an impact on the financial performance of South African retail firms. The key findings of the study were the following: (1) There was a negative relationship between average collection period and financial performance; (2) a negative relationship between average age of inventory and financial performance measures (NOPM and ROA) was found; (3) the average payment period was found to be negatively related to return on equity; and (4) the cash conversion cycle and NOPM variables were found to be negatively related. The study concluded that working capital management practices influenced the financial performance of the South African retail firms for the period of this study. It is recommended that South African retail firms observe prudent optimal working capital management practices, as these influence their financial performance.

Ihloso ekulu yerhubhululo bekukuthola ubudlelwano obuphakathi kwehlelo lezokuphathwa kwekhaphithali yemisebenzi yangamalanga (working capital management) kanye nobujamo beemali bamafema womkhakha weritheyila eSewula Afrika, okumafema lawo atloliswe kuZiko lezokuThengwa kwamaTjhezi (JSE). Irhubhululo beliphenya umthelela wokuphathwa kweemali zemisebenzi yangamalanga malungana nobujamo beemali bamafema ali-14 weritheyila eSewula Afrika esikhathini esiphakathi 2010-2019. Amano we-Panel data asetjenzisiwe, ngalendlela, pooled ordinary least squares (pooled OLS), imithelela engatjhugulukiko kanye neenlinganisi zemithelela eyenzeka nanyana bunjani (random effects estimators) zisetjenzisiwe ukuhlola ubudlelwano obuphakathi kwehlelo lokuphathwa kwekhaphithali yemisebenzi yangamalanga kanye nobujamo beemali. Isilinganiso seminyaka ye-inventhri (Average age of inventory (AAI), isikhathi esilingeneko sokubuthelela (ACP), isikhathi esilingeneko sokubhadela (APP) kanye nesayikeli yokutjhugululwa kwemali (cash conversion cycle (CCC) kusetjenziswe njengesijameleli sokuphathwa kweemali zemisebenzi yangamalanga kanti ubujamo bezeemali bona bujanyelwe yi-net operating profit margin (NOPM), inzuzo yokutjalwa kweemali ngepahla eligugu (ROA) kanye nenzuzo evela ku-ikhwithi (ROE) zisetjenziswe njengeenjameli zobujamo bezeemali. Ihloso yokuthoma bekukuthola ubudlelwano obuphakathi kwesilinganiso esilingeneko seminyaka ye-inventhri kanye nobujamo bezeemali malungana namafema weritheyila eSewula Afrika. Ihloso yesibili bekukuqinisekisa ukobana mhlambe ngabe isikhathi esilingeneko sokubuthelelwa kwedatha sibe nomthelela phezu kobujamo bezeemali bamafema amaritheyila weSewula Afrika. Kwesithathu, irhubhululo belifuna ukuthola ukuthi mhlambe ngabe isikhathi esilingeneko sokubhadela sibe nomthelela phezu kobujamo bezeemali bamafema weritheyila weSewula Afrika. Ilwazi eliqakathekileko elitholakeleko lilandela ngalendlela: (1) Kutholakele ubudlelwano obumbi phakathi kwesikhathi esilingeneko sokubuthelela idatha kanye nobujamo bezeemali. (2) Kutholakele ubudlelwano obumbi phakathi kwesikhathi esilingeneko se-inventhri kanye nemizamo yobujamo bezeemali (NOPM kanye ne-ROA. (3) Kutholakele ukuthi isikhathi esilingeneko asikhambisani kuhle nenzuzo ku-ikhwithi. (4) Kutholakele ukuthi Isayikeli yokutjhugululwa kwemali (cash conversion cycle) kanye namavarebuli wenzuzo engezelelweko (net operating profit margin variable) azihlobani kuhle. Irhubhululo liphethe ngokuthi iinkambiso zokuphathwa kwekhaphithali yemisebenzi yangamalanga zibe nomthelela phezu kobujamo bezeemali bamafema weritheyila weSewula Afrika, esikhathini sokwenza leli rhubhululo. Kunconywe ukobana amafema weritheyila weSewula Afrika ayazilandela iinkambiso eziphephileko nezinenzuzo ephezulu zokuphathwa kwekhaphithali yemisebenzi yangamalanga, njengombana leziinkambiso zinomthelela phezu kobujamo bezeemali.

Injongo engundoqo yesi sifundo yayikukuqwalasela ulwalamano phakathi kolawulo lwemali yokusebenza kunye nempumelelo yentsebenzo yamashishini entengiso eMzantsi Afrika, mashishini lawo akudweliso lweJohannesburg Stock Exchange (JSE). Esi sifundo siphonononge ifuthe lendlela elawulwa ngayo imali yokuqhuba umsebenzi ekuphumeleleni kwamashishini ali-14 aseMzantsi Afrika kwisithuba seminyaka yama2010-2019. Kwasetyenziswa amacebo ahlukeneyo okuqokelela iinkcukacha zolwazi ngokuqwalasela iqela, macebo lawo afana nepooled ordinary least squares (pooled OLS), fixed effects kunye nerandom effects estimators ekuvavanyeni ulwalamano phakathi kolawulo lwemali yokusebenza kunye nempumelelo yentsebenzo yamashishini. Kwaqwalaselwa ixesha elithatyathwa ekuthengiseni iimveliso (AAI), ixesha elithatyathwa ekuhlawuleni amatyala kwishishini (ACP), ixesha elithatyathwa lishishini ekuhlawuleni awayo amatyala (APP) kunye nexesha elithatyathwa ekuguquleni iimveliso zibe yimali (CCC) njengemilinganiselo yolawulo lwemali yokusebenza lo gama intsebenzo yamashishini yalinganiselwa ngokuqwalasela inzala eyenziweyo (NOPM), imali eyenziwa ngokusebenzisa iiasethi (ROA) nengeniso kwizabelo (ROE). Isiphumo esibonakalayo sokuqala yaba kukufumanisa ulwalamano phakathi kwexesha elithatyathwa ekuthengiseni iimveliso nentsebenzo yamashishini entengiso oMzantsi Afrika. Isiphumo esibonakalyo sesibini yaba kukuqinisekisa ukuba ingaba ixesha elithatyathwa ekuhlawuleni amatyala kwishishini linefuthe na kwintsebenzo yamashishini entengiso oMzantsi Afrika. Okwesithathu, esi sifundo sazama ukufumanisa ukuba ingaba ixesha elithatyathwa lishishini ekuhlawuleni awayo amatyala linefuthe na kwintsebenzo yamashishini entengiso oMzantsi Afrika. Okuphambili okwafunyaniswa sesi sifundo kumi ngolu hlobo: (1) Aluluhle ulwalamano phakathi kwexesha elithatyathwa ekuhlawuleni amatyala kwishishini nentsebenzo yamashishini. (2) Aluluhle ulwalamano phakathi kwexesha elithatyathwa ekuthengiseni iimveliso nentsebenzo yamashishini (iNOPM neROA. (3) Ixesha elithatyathwa lishishini ekuhlawuleni awayo amatyala lafumaniseka liyichaphazela kakubi ingeniso kwizabelo. (4) Ixesha elithatyathwa ekuguquleni iimveliso zibe yimali nenzala eyenziweyo zafumaniseka zingahambelani kakuhle. Esi sifundo sagqiba kwelokuba iinkqubo zolawulo lwemali yokusebenza ziye zayichaphazela intsebenzo yamashishini entengiso oMzantsi Afrika kwixesha leminyaka yolu phando. Kucetyiswa ke ngoko ukuba amasishini entengiso oMzantsi Afrika asebenzise iinkqubo zobulumko kulawulo lwemali yokusebenza ngoba ezo nkqubo zinefuthe kwintsebenzo yamashishini.