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http://dx.doi.org/10.13106/jafeb.2022.vol9.no6.0297

The Nexus Between Inventory Management and Firm Performance: A Saudi Arabian Perspective  

HASHED, Abdul Wahid Ahmed (College of Business Administration, Prince Sattam Bin Abdulaziz University)
SHAIK, Abdul Rahman (College of Business Administration, Prince Sattam Bin Abdulaziz University)
Publication Information
The Journal of Asian Finance, Economics and Business / v.9, no.6, 2022 , pp. 297-302 More about this Journal
Abstract
The current study examines the relationship between inventory management efficiency and financial performance in Saudi Arabian companies. The study collected data from the companies listed on Tadawul (a Saudi Arabian stock exchange) during the period starting from 2016 and ending in 2020. The study uses pooled regression model by incorporating Return on Assets (ROA) and Inventory Turnover Ratio (ITR) as a performance measurement variable and inventory conversion period as an inventory management variable to report the results. The results show a positive and significant association between inventory management and firms' financial growth measured in terms of Return on Assets (ROA). Further, the study reports a positive and significant association between the inventory conversion period and inventory turnover (ITR). This shows that managing inventory efficiently shall positively impact the firm's performance. The other variables, such as debt ratio and gross profit, are positively related to ROA and negatively correlated with ITR. The firm growth is positively associated with both the dependent variables. The results suggest that the management of inventory in Saudi Arabian firms is efficient. Further, the firm size is positively associated with ROA and ITR. This shows a nexus between inventory management efficiency and firms' financial growth in Saudi Arabian companies.
Keywords
Inventory Turnover Ratio; Inventory Conversion Period; Return on Assets; Firm Growth; Financial Performance;
Citations & Related Records
Times Cited By KSCI : 3  (Citation Analysis)
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