Impact of The Cash Conversion Cycle on Financial Performance: A Study of the Tyre Manufacturing Sector

Abstract

Purpose: The purpose of the study is to examine the impact of certain factors, including CCC, ATO, AT, NPM, LEV, FS, and TQ, on the financial performance (ROA) of the firms belonging to the sector: Indian Tyres and Allied. Methodology: The least squares regression method is used to study the impact of seven independent variables on ROA. A set of five tire firms was selected, and a 10-year time interval was taken from 2013–14 to 2022–23 for data evaluation. Findings: The results indicate that cash conversion cycle (CCC), asset turnover (ATO), and net profit margin (NPM) are statistically significant predictors of return on assets (ROA), having 84.15% of the impact on the financial performance (ROA) of the selected firms.Practical Implications: The study highlights the notable influence of CCC, ATO, and NPM on ROA, thus enabling us to focus on the pivotal variables that impact financial performance. Originality/Value: This research will be extremely useful to target and focus on the factors that influence the financial performance of the firm in the particular industry context.

Keywords: #Financial Performance, #Return on Assets, #Cash Conversion Cycle, #Asset Turnover Ratio, #Asset Tangibility, #Net Profit Ratio, #Financial Leverage, #Firm size, #Tobin’s Q, #Indian Tyre, #allied sector.