Cash conversion cycle and its impact on the liquidity of an industrial company

Authors

DOI:

https://doi.org/10.15381/quipu.v29i59.20141

Keywords:

Cash cycle, liquidity, rotation, cash, company

Abstract

Objective: To establish the impact of the cash conversion cycle on the liquidity of the industrial company Damar G&L S.A.C of Lima, during 2016 to 2019. Method: The study presented a quantitative approach with a range of cross-sectional correlational, using a non-experimental design. The method used to collect the data was the documentary analysis. As the study population, this research used data from the accounting records of accounts receivable, inventories, and the company’s payable accounts, in which 48 financial monthly statements were structured. Results: The results show that there is a minimal non-significant relationship between the cash conversion cycle and liquidity (Rho = .075, p = .614) corresponding to the periods under study. Furthermore, the independent variable’s indicators, accounts receivable turnover period, inventory turnover period, and accounts payable turnover period, show a weak relationship (Rho = .201, -.267, .086) in the acid test, with a significance level greater than 5%. Conclusion: It is concluded that, during the 2016-2019 period of the company under review, the cash conversion cycle does not directly affect its liquidity.

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Author Biographies

  • Patrick Ademir Diaz Cuenca, Universidad Peruana Unión

    Public Accountant, Bachelor's Degree in Accounting and Tax Management from the School of Business Sciences of Universidad Peruana Unión, Lima - Peru. Accounting analyst who develops professional activities in the field of costs and finances in an industrial company in the city of Lima.

  • Jesabel Jesús Ramón Martínez, Universidad Peruana Unión

    Public Accountant, Bachelor's Degree in Accounting and Tax Management from the School of Business Sciences of Universidad Peruana Unión, Lima-Peru. She is currently developing professional activities in the field of taxation in an accounting consulting firm in the city of Lima.

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Published

2021-05-27

Issue

Vol. 29 No. 59 (2021)

Section

Original papers

License

Copyright (c) 2021 Patrick Ademir Diaz Cuenca, Jesabel Jesús Ramón Martínez

Creative Commons License

This work is licensed under a Creative Commons Attribution 4.0 International License.

AUTHORS RETAIN THEIR RIGHTS:

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b. Authors retain their right to share, copy, distribute, perform and publicly communicate their article (eg, to place their article in an institutional repository or publish it in a book), with an acknowledgment of its initial publication in Quipukamayoc .

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How to Cite

Diaz Cuenca, P. A., & Ramón Martínez, J. J. (2021). Cash conversion cycle and its impact on the liquidity of an industrial company. Quipukamayoc, 29(59), 43-53. https://doi.org/10.15381/quipu.v29i59.20141