Inventories and company’s financial performance
Väätäinen, Jukka (2021-05-11)
Väätäinen, Jukka
11.05.2021
Julkaisun pysyvä osoite on
https://urn.fi/URN:NBN:fi-fe2021060936030
https://urn.fi/URN:NBN:fi-fe2021060936030
Tiivistelmä
In recent times working capital management has emerged in both the academic literature and operational business. Several companies aim to optimize their working capital levels in a way that working capital wouldn’t be tied into daily business. Effective working capital management for instance improves company’s liquidity position and increases the return on investment ratios. Working capital management is involved in various stages of company’s operations chain, from the procurement of raw materials through inventories to the sale of goods to the end customer. In a larger context, working capital management can be seen from the perspective of whole value chain or supply chain, in which working capital should be optimized in a supply chain level in a way that liquidity in whole supply chain improves and also return on investment ratio. Inventories are a key component of working capital that of-ten tie significant amount of a company’s working capital.
The purpose of this thesis is study relationship between value of stock and company’s financial performance. The theoretical framework of the thesis is based on academic literature and academic research of working capital. The thesis aim to determine the statistical relation-ship between the value of inventory and several key indicators of company’s performance, such as profitability and inventory turnover. In this thesis the data was collected from companies financial statements in seven industries and from two countries: Finland and United States of America. The data used in this study is between years 2011 and 2019. In order to achieve the research objectives, data from different industries and different countries was analyzed, and the correlation and regression between key variables was studied.
As a managerial implications of this thesis it shows the statistical relationship between the value of inventory and selected variables from seven different industries, and results between selected industries and between Finnish and US companies. The results show, for example, that US companies have stronger positive statistical correlation between value of the inventories and business profitability than Finnish companies. In addition, based on this study, the values of inventories has increased an average during the period under review in both countries in Finland and in the USA. The results also observe that in most industries studied, an increase in the value of inventory slows down inventory turnover.
The purpose of this thesis is study relationship between value of stock and company’s financial performance. The theoretical framework of the thesis is based on academic literature and academic research of working capital. The thesis aim to determine the statistical relation-ship between the value of inventory and several key indicators of company’s performance, such as profitability and inventory turnover. In this thesis the data was collected from companies financial statements in seven industries and from two countries: Finland and United States of America. The data used in this study is between years 2011 and 2019. In order to achieve the research objectives, data from different industries and different countries was analyzed, and the correlation and regression between key variables was studied.
As a managerial implications of this thesis it shows the statistical relationship between the value of inventory and selected variables from seven different industries, and results between selected industries and between Finnish and US companies. The results show, for example, that US companies have stronger positive statistical correlation between value of the inventories and business profitability than Finnish companies. In addition, based on this study, the values of inventories has increased an average during the period under review in both countries in Finland and in the USA. The results also observe that in most industries studied, an increase in the value of inventory slows down inventory turnover.