The effects of the cash cycle on firm value

THE EFFECTS OF THE CASH CYCLE ON FIRM VALUE Working capital management is very important in order to make the contribution of the companies to their shareholders, employees, suppliers -in short to the societies- sustainable. In this context, it is seen that the cash cycle is frequently used in studies regarding working capital management. Although the importance of cash cycle for liquidity management has been expressed more clearly in previous studies, it is seen that there are different results in the studies on business profitability and firm value. In this thesis, in order to measure the effects of the cash cycle on firm value, the intermediate variables of Interest, Tax, Depreciation, Earnings Before Amortization (EBİTDA), share register value, and working capital value are used. For the study, 68-period data of 43 companies whose share registers in BIST were traded continuously between 2003-2019, including quarterly periods, were procured. Variables belonging to 67 periods calculated from these data were analyzed by panel data analysis. As a result of the work done; It has been observed that there is an opposite relationship between the Cash Cycle (CC) and the firm value and stock return of publicly held companies. It is understood that as the Cash Cycle (CC) decreases (in terms of duration), the firm value and stock return of publicly held companies increase, and as the Cash Cycle (CC) increases (in terms of duration), the firm value and the stock return of publicly held companies decrease. It has been observed that there is an opposite relationship between Cash Cycle (CC) and company valuation results based on FCFF, FCFE and EVA method. It is concluded that as the Cash Cycle (CC) decreases (in terms of duration) the value of the firm increases, and as the Cash Cycle (CC) increases (in terms of duration) the value of the firm decreases.