Ponte Academic Journal Feb 2017, Volume 73, Issue 2 |
WORKING CAPITAL MANAGEMENT AND FINANCIAL CAPABILITIES OF SMALL MEDIUM ENTERPRISE IN MALAYSIA Author(s): Nor Edi Azhar Mohamad ,Noriza Mohd Saad, Noor Raida Abd Rahman J. Ponte - Feb 2017 - Volume 73 - Issue 2 doi: 10.21506/j.ponte.2017.2.5 Abstract: Background: Small and medium-sized enterprises (SMEs) are identified as an essential component that provide valuable contribution to the overall economy, specifically in emerging countries like Malaysia. Purpose: The study aims at examining WCM practices of SMEs, as well as to test the relationship between WCM and financial capabilities of SMEs. Methodology: the study focuses on 100 valid samples of SMEs, covering the period of 2009-2014; multiple regressions was employed in order to test the hypotheses. Results: Results indicated that low cash conversion cycle (CCC) increases the financial capabilities of SME. The correlations results for Z-Score indicated a negative significant coefficient with CCC (-0.205) and TDTA (-0.486) both at 1% significant level. Working capital components could statistically significantly predict SME’s financial capability as represent by the Z-Score, F= 116.390, p< .01. Conclusion: A moderate relationship between working capital management and financial capabilities of selected SME firms in Malaysia is a great concern. The scope can be further extended by conducting research that could include management components such as marketable securities, cash flow and others.
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