Access the full text.
Sign up today, get DeepDyve free for 14 days.
T. Ramachandra, J. Rotimi (2011)
The Nature of Payment Problems in the New Zealand Construction IndustryAustralasian Journal of Construction Economics and Building, 11
Journal of Banking and Finance, 37
Abuzar Eljelly (2004)
Liquidity ‐ profitability tradeoff: An empirical investigation in an emerging marketInternational Journal of Commerce and Management, 14
G. Boer (1999)
Managing the Cash GapJournal of accountancy, 188
R. Camp (1989)
Benchmarking: The Search for Industry Best Practices That Lead to Superior Performance
Abbie Smith (1990)
Corporate ownership structure and performance *1: The case of management buyoutsJournal of Financial Economics, 27
The Open Business Journal, 2
Kung Chen, Thomas Shimerda (1981)
An Empirical Analysis of Useful Financial RatiosFinancial Management, 10
M. Marcus (1969)
Profitability and Size of Firm: Some Further EvidenceThe Review of Economics and Statistics, 51
V. Richards, Eugene Laughlin (1980)
A Cash Conversion Cycle Approach to Liquidity AnalysisFinancial Management, 9
Construction Economics and Building, 11
A. Ammar, A. Hanna, E. Nordheim, J. Russell (2003)
Indicator Variables Model of Firm’s Size-Profitability Relationship of Electrical Contractors Using Financial and Economic DataJournal of Construction Engineering and Management-asce, 129
T. Schleifer (2002)
Degenerating Image of the Construction IndustryPractice Periodical on Structural Design and Construction, 7
(2008)
Key Financial Indicators and the Drivers for Success Best Practices
H. Bergeron (1994)
Primer for Financial Management of Small Consulting FirmsJournal of Management in Engineering, 10
P. Ostwald (2000)
Construction cost analysis and estimating
(2008)
The slow erosion of suretyship principles: an uncertain future for” “Pay-When_paid’ and ‘Pay-If-Paid’ Clauses in public construction subcontracts
Y. Babalola, F. Abiola (2013)
Financial Ratio Analysis of Firms: A Tool for Decision MakingInternational Journal of Management Sciences, 1
D. Mathuva (2015)
The Influence of Working Capital Management Components on Corporate Profitability: A Survey on Kenyan Listed FirmsResearch Journal of Business Management, 4
Annalisa Ferrando, Klaas Mulier (2011)
Do Firms Use the Trade Credit Channel to Manage Growth?European Central Bank Research Paper Series
(2016)
New planning perspective for construction management
A. Raheman, Mohamed Nasr (2007)
WORKING CAPITAL MANAGEMENT AND PROFITABILITY-CASE OF PAKISTANI FIRMS, 3
M. Deloof (2003)
Does Working Capital Management Affect Profitability of Belgian FirmsJournal of Business Finance & Accounting, 30
R. Vrijhoef, L. Koskela (2000)
The four roles of supply chain management in constructionEuropean Journal of Purchasing & Supply Management, 6
(2010)
The influence of working Capital components on corporate profitability: a survey on Kenyan listed firms
Gregory Magee (1996)
Financial Management Primer for New Project ManagersJournal of Management in Engineering, 12
M. El-Mashaleh, R. Minchin, William O'brien (2007)
Management of Construction Firm Performance Using BenchmarkingJournal of Management in Engineering, 23
Amarjit Gill, N. Biger, Neil Mathur (2010)
The Relationship Between Working Capital Management And Profitability: Evidence From The United StatesBusiness and Economics Journal, 1
R. Kangari (1988)
Business Failure in Construction IndustryJournal of Construction Engineering and Management-asce, 114
J. Gentry, R. Vaidyanathan, Heiwai Lee (1990)
A Weighted Cash Conversion CycleFinancial Management, 19
E. Abt (2010)
Understanding statistics 3Evidence-Based Dentistry, 11
M. McIntyre (2007)
Construction business owner
Despite economic growth in the construction sector of the USA, profit margins are persistently low. An examination of collection practices of over 400 construction firms revealed a high number of firms with a collection period ratio above 30 days. This study aims to examines the variance between collection period ratio (days in accounts receivables, DAR) and days in accounts payables (DAP) and its correlation with profitability ratios [e.g. gross profit margin (GPM) and net profit margin (NPM)].Design/methodology/approachDescriptive statistics were used to observe trends over three years of financial reporting (2013 through 2016), while correlation statistics were used to understand relationship or association between the different financial ratios and the collection period variance (CPV). Respondent firms were stratified by the North American Industry Classification System, company type and revenue size.FindingsConventional theory holds that increasing financial expenses because of collections negatively impacts profitability. Therefore, the hypothesis of the study suggested a statistical correlation between the CPV and profitability measures. Results of the study, however, supported the null hypothesis. Reasons for the lack of correlation are considered as well as necessary follow-up studies before rejecting the hypothesis.Originality/valueNo such study was found specific to the construction industry, and as such, this study contributes to better understanding the implications of extensive collection periods. Further, this study contradicts assumptions about the behavior of the construction industry and the causal relationship between extensive collection periods and profitability.
Journal of Financial Management of Property and Construction – Emerald Publishing
Published: Oct 30, 2018
Keywords: Management accounting; Benchmarking; Construction financial management; Profit margins
Read and print from thousands of top scholarly journals.
Already have an account? Log in
Bookmark this article. You can see your Bookmarks on your DeepDyve Library.
To save an article, log in first, or sign up for a DeepDyve account if you don’t already have one.
Copy and paste the desired citation format or use the link below to download a file formatted for EndNote
Access the full text.
Sign up today, get DeepDyve free for 14 days.
All DeepDyve websites use cookies to improve your online experience. They were placed on your computer when you launched this website. You can change your cookie settings through your browser.