Title: Impact of cash conversion cycle on financial performance: an empirical study of listed companies in Botswana

Authors: C.R. Sathyamoorthi; Christian John Mbekomize; Lame Bakwenabatsile

Addresses: Faculty of Business, University of Botswana, P.O. Box 70430, Private Bag 00701, Gaborone, Botswana ' Faculty of Business, University of Botswana, P.O. Box 70430, Private Bag 00701, Gaborone, Botswana ' Faculty of Business, University of Botswana, P.O. Box 70430, Private Bag 00701, Gaborone, Botswana

Abstract: The study examines the impact of cash conversion cycle (CCC) on the financial performance of selected listed companies in Botswana Stock Exchange for the period 2012-2018. Financial statements are the main source of data. Return on assets (ROA) and return on equity (ROE) are the dependent variables measuring financial performance. The data is analysed using descriptive statistics, correlation analysis, and multiple regression analysis. Correlation analysis reveals a non-significant negative relationship between CCC and profitability, whereas the control variables of size and debt exhibit a significant negative relationship with firm profitability. The regression results show that CCC has an insignificant positive effect on ROA but has a significant impact on ROE. Both size and debt have a significant impact on ROA and ROE. The findings highlight the need for the firms to focus on policies and strategies that will reduce the length of CCC to enhance profitability and firm value.

Keywords: cash conversion cycle; CCC; return on assets; ROA; return on equity; ROE; profitability; Botswana.

DOI: 10.1504/AAJFA.2023.132956

Afro-Asian Journal of Finance and Accounting, 2023 Vol.13 No.4, pp.415 - 433

Received: 10 Jun 2020
Accepted: 20 Nov 2020
Published online: 22 Aug 2023 *

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