RETURN ON CURRENT ASSETS, WORKING CAPITAL AND REQUIRED RATE OF RETURN ON EQUITY
Journal Title: e-Finanse - Year 2014, Vol 10, Issue 2
Abstract
The problem of return on current assets and return on working capital related to the cost of equity invested in a company is analyzed in this paper. Risk – return and liquidity – profitability trade-offs influence the company’s equilibrium and management decisions. Liquidity is measured by the cash conversion cycle and it is related to the working capital strategy, measured by current ratio. Rate of return on current assets should be related to the rate of return on working capital that is linked to the cost of capital and the required rate of return. The results indicate that there is a positive relationship between the return on current assets and cash conversion cycle, a positive relationship between cost of equity and return on working capital meaning that the working capital, cash conversion cycle and current assets management are related to profitability, and cost of equity is determined by the required rate of return calculated based on the Capital Asset Pricing Model.
Authors and Affiliations
Monika Bolek
Keywords
Related Articles
- EP ID EP105259
- DOI -
- Views 116
- Downloads 0
POLISH COOPERATIVE BANKS AS NET LENDERS IN THE MONEY MARKET
Due to the traditional operational model of cooperative banks which is mostly based on financial intermediation, the range of a local bank’s social influence in a given environment is highly dependent on the money transf...
CROWDFUNDING AS AN ALTERNATIVE METHOD OF RAISING CAPITAL
Crowdfunding is a method of financing new ventures, commercial, cultural or social, often in return for future products or actions, engaged in by many investors. Currently, it is an important element in the structure of...
EXCHANGE TRADED COMMODITIES AS A CATEGORY OF INNOVATIVE PRODUCTS ON EUROPEAN FINANCIAL
The article presents the main features of one category of innovative financial products – exchange traded commodities (ETCs) and results of the analysis of the European market for ETCs. ETCs are products listed and trade...
ANALYSIS OF SPATIAL HOMOGENEITY OF INTEGRITY STANDARDS IN SELECTED EU OECD COUNTRIES
The principle of transparency not only is changing but its importance is increasing. International organizations, including the OECD, are seeking to develop harmonized standards of transparency in public administration....
FINANCING OF SMART GROWTH IN LESS DEVELOPED REGIONS ON THE EXAMPLE OF POLAND
The aim of this paper is twofold. First, the smart growth concept is examined with a focus on challenges associated with applying this concept in the less developed regions. Second, the impact of EU structural funds on s...