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- Title
FİRMALAR İÇİN LİKİDİTE VE KARLILIK ARASINDA BİR ÖDÜNLEME VAR MI? BİST ÖRNEĞİ.
- Authors
Çelenak, Bmin Hüseyin; Acar, Elif
- Abstract
Effective management of short-term assets (and sources of funds) has become vital in today's business world due to fluctuations in both financial and commodity markets. In the finance literature, management of short-term assets and short-term sources of funds is evaluated within the framework of working capital management. The liquidity choice is also considered to be within the working capital management scope. The choice of cash vs short-term assets has a ofitability. The major view in finance suggests that managers make a tradeoff between liquidity, risk and profitability. Investments in current assets and the type of financing used for these assets have several costs to the company. Naturally, all these costs and financing preferences significantly affect the company's profitability as well as its riskiness. That's why in literature there is a prevailing view that there must be an optimal level of investment in short-term assets with appropriate financial resources. However, in emerging economies where financial markets are not sufficiently developed because of information asymmetries and financial constraints, investments in the various components of working capital may have a positive effect on the profitability contrary to expectations. For example, extending customers longer periods of sales-credit may have a constraints may find the longer-term trade-credits very beneficial, especially in the face of dysfunctional money markets. On the other hand, speculative cash or inventory holding may also increase profits, given the imperfect financial markets. In this study, we aim to determine exact causal relationship between liquidity and profitability using Panel VAR and system GMM method for Turkey. Results suggest that there is a positive relationship between liquidity and profitability and nonlinear relationship between operation cycle and company profit.
- Publication
Balkan Journal of Social Sciences / Balkan Sosyal Bilimler Dergisi, 2016, Vol 5, p298
- ISSN
1309-9841
- Publication type
Article