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Analytical Procedures Phase of PCAOB Audits: A Note of Caution in Selecting the Forecasting Model

Author

Listed:
  • Sathyamoorthi C.R.
  • Mogotsinyana Mapharing
  • Popo Selinkie

Abstract

This study focused on the effect of working capital management on the profitability of the listed retail stores in Botswana Stock Exchange for the period 2012-2016. Financial statements of the listed Retail Stores were used as the main source of data. Return on Assets was used as the dependent variable to measure profitability and the components to measure working capital management comprised of Average Collection Period, Inventory Conversion Period, Average Payment Period, Cash Conversion Cycle, Debt, Current and Quick Ratios. Correlation analysis revealed that a few variables were significantly correlated with each other. Average Payment Period and Inventory Conversion Period were found to be positively and significantly correlated and Cash Conversion Cycle was significantly and positively correlated with Inventory Conversion Period.The regression results showed that only three variables out of the seven independent variables were statistically significant, namely Average Payment Period, Current Ratio and Quick Ratio. The remaining four variables were found to be statistically insignificant. The above findings have implications for the management of the listed retail store in Botswana.

Suggested Citation

  • Sathyamoorthi C.R. & Mogotsinyana Mapharing & Popo Selinkie, 2018. "Analytical Procedures Phase of PCAOB Audits: A Note of Caution in Selecting the Forecasting Model," Applied Finance and Accounting, Redfame publishing, vol. 4(1), pages 82-94, February.
    • Handle: RePEc:rfa:afajnl:v:4:y:2018:i:1:p:82-94
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    References listed on IDEAS

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    More about this item

    Keywords

    Botswana; retail stores; working capital management components; profitability; return on assets;
    All these keywords.

    JEL classification:

    • R00 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General - - - General
    • Z0 - Other Special Topics - - General

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