A Study on the Impact of Cash Management on the Financial Performance of the Listed Manufacturing Companies from Muscat Securities Market, Sultanate of Oman

Sam Sundar Chintha and Kollipara Vamsi Prasad
Additional contact information
Sam Sundar Chintha: Faculty of Business Management, Majan University College, Muscat, Oman
Kollipara Vamsi Prasad: Faculty of Business Management, Majan University College, Muscat, Oman

International Journal of Business and Administrative Studies, 2021, vol. 7, issue 1, 25-35

Abstract: Cash is a valuable yet scarce resource that all businesses have in limited quantity. Present research on cash management has focused on its connection with many important areas such as the effect on the liquidity of the business, its financial performance, bankruptcy, and the overall working capital itself. To validate the relationships between cash management and financial performance, 36 companies listed in Muscat Securities Market (MSM) had been chosen over time, starting from 2014 ending to 2019. For this, the study used cash management ratios, which were the Cash Ratio (CR), Operating Cash to Debt Ratio (OC-DR), and the financial performance ratios are Return on Assets (ROA), Return on Equity (ROE) and Net Profit Ratio (NPR). The CR has a statistically significant positive correlation with ROA of 0.176, ROE of 0.103 and NPR of 0.193 values. The OC-DR also has a statistically significant positive relationship with ROA (0.471), ROE (0.133), and NPR (0.422). The R-square value was 17.8%, where NPR is a dependent variable. When Return on Asset has been taken as a dependent variable, the R-square value was identified as 22.2%. But ROE has a limited impact on the independent variables with 2%. Overall, the main conclusion drawn is that cash managemen practices used by the Omani manufacturing firms are explaining a significant amount of the financial performance However other relevant factors such as the amount of manufacturing sales contracts received, the social development status of the business, impact of the financial crisis within the economy on the demand of the goods or commodities etc. may influence the cash management practices and draw a better conclusion. The findings can be helpful for policy makers in understanding the main factors that impact cash management and how these factors can be regulated.

Keywords: Cash management; Omani manufacturing; financial performance; CR; OC-DR (search for similar items in EconPapers)
Date: 2021
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
https://kkgpublications.com/business-v7-i1-article-3/ (application/pdf)
https://kkgpublications.com/wp-content/uploads/2021/04/ijbas.7.10003-1.pdf (text/html)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:apa:ijbaas:2021:p:25-35

DOI: 10.20469/ijbas.7.10003-1

Access Statistics for this article

International Journal of Business and Administrative Studies is currently edited by Professor Dr. Bahaudin G. Mujtaba

More articles in International Journal of Business and Administrative Studies from Professor Dr. Bahaudin G. Mujtaba Calle Alarcon 66, Sant Adrian De Besos 08930, Barcelona Spain.
Bibliographic data for series maintained by Professor Dr. Bahaudin G. Mujtaba ().