The Impact of Business Cycle and Operational Efficiency of Cash Conversion Cycle on Performance Evaluation Criteria in Tehran Stock Exchange

Subject Areas : business management

Davoud Mostafazadeh ¹ , Mohsen Hamidiyan ² , Fatemeh Sarraf ³

1 - Department of Financial Management, South Tehran Branch, Islamic Azad University, Tehran, Iran.
2 - Department of Financial Management, South Tehran Branch, Islamic Azad University, Tehran, Iran.
3 - Department of Financial Management, South Tehran Branch, Islamic Azad University, Tehran, Iran.

Received: 2021-06-21 Accepted : 2021-08-02 Published : 2021-12-22

Keywords: Cash conversion cycle, Economic Value Added, Net Trading Cycle, Equity Returns, Asset Returns,

Abstract :

One of the most important goals of financial managers is to maximize shareholder profits. And working capital management using the optimal combination of working capital items, ie current assets and liabilities, and shortening the cash conversion period, which indicates the period or number of days of the cash cycle in the production path through the purchase of inventories, sale of loans and Converting cash into accounts receivable and collecting receivables helps financial managers achieve their predetermined goals. Therefore, the purpose of this study is to investigate the effect of business cycle and operational efficiency of the cash conversion cycle on performance appraisal criteria in Tehran Stock Exchange. Therefore, a sample of 120 companies listed on the Tehran Stock Exchange in the period 1392 to 1397 was selected and analyzed using multivariate regression model and panel data using the fixed effects model method. Findings showed that the relationship between cash conversion cycle and business cycle with equity return is positive and significant and the relationship between cash conversion cycle and net business cycle with return on assets and economic value added was negative and significant.