Research Information System
Journal of Business Economics and Finance, vol.7, no.3, pp.288-294, 2018 (Refereed Journals of Other Institutions)
Purpose- Cash gap or cash conversion cycle refers to the time interval between the date when a company pays cash out for the inventory
it purchases and the date it receives cash from customers for the same inventory. That interval must be financed. Management of cash
conversion cycle is vital issue in corporate financial management since it directly affects the profitability of the firms. The purpose of this
study is to analyze the relationship of cash gap and corporate profitability.
Methodology- The data set includes all manufacturing firms listed in Borsa Istanbul (BIST) for the year 2017. The financial sector firms are
excluded since their financial statements have different aspects. Regression and correlation analyses are conducted to examine the
relationship between the cash gap and profitability.
Findings- The results of the study evaluate how cash conversion cycle affects the profitability and show if there is a statistical significance
between profitability the cash conversion cycle.
Conclusion- Managers of the companies that handle the cash conversion cycle correctly and keep each different component (accounts
receivables, accounts payables, inventory) to an optimum level can create profits and seems successful from the views of investors. The
study also contributes to the literature on the issue of relationship between cash gap and the firm’s profitability.