Thesis Abstract

Abstract
The cash conversion cycle (CCC) and capital structure are two critical aspects of a firm's financial management. This study aims to investigate the impact of the cash conversion cycle on the capital structure of firms. The CCC represents the time it takes for a company to convert its investments in inventory and other resources into cash flows from sales. A shorter CCC indicates better liquidity and efficiency in managing working capital. The capital structure of a firm refers to the mix of debt and equity used to finance its operations. It is essential for firms to strike a balance between debt and equity to optimize their cost of capital and maximize shareholder wealth. A firm's capital structure decisions can affect its financial performance, risk profile, and overall value. The relationship between the cash conversion cycle and capital structure is complex and multifaceted. A longer cash conversion cycle may lead to higher working capital requirements, which can necessitate increased debt financing. On the other hand, a shorter CCC can reduce the need for external financing and lower financial risk. Therefore, understanding how the CCC influences capital structure choices is crucial for firms seeking to enhance their financial management practices. This research will employ quantitative analysis using firm-level data to examine the impact of the cash conversion cycle on capital structure decisions. By analyzing a sample of companies from various industries, we aim to identify patterns and trends in how the CCC influences capital structure choices. The study will consider factors such as industry dynamics, firm size, profitability, and growth opportunities to provide a comprehensive analysis of the relationship between the CCC and capital structure. The findings of this research can have significant implications for financial managers, investors, and policymakers. By understanding the interplay between the cash conversion cycle and capital structure, firms can make informed decisions to improve their financial performance and competitiveness. Investors can also use this information to assess the financial health and risk profile of potential investment opportunities. Policymakers may benefit from insights into how firms manage their working capital and financing decisions to promote economic growth and stability.

Thesis Overview