Najib H.S. Farhan

The main aim of this paper is to evaluate the impact of demonetization on Indian firm’s quarterly financial performance before and after demonetization period (March-December, 2017), and to find out if companies’ age helps to face financial disruption. Four variables, which are net sales, total income, net profit after tax, and earnings per share, were taken as proxies for analyzing the quarterly financial performance of 2,892 companies listed on Bombay Stock Exchange (BSE), National Stock Exchange (NSE), and Calcutta Stock Exchange (CSE). Nonparametric test, particularly Wilcoxon Matched-Pairs Signed Rank Test and Kruskal-Wallis one-way analysis of variance, were applied in analyzing the data. Results reveal that there is a statistically significant difference between the financial performance before and after demonetization at 5% level of significance. It was also found that the decrease/increase in the financial performance of all the firms was affected by the demonetization process, irrespective of their ages. The findings could be useful for financial managers and financial consultants, as they would be able to focus on the issues that matter most at the time of financial disruption.

Credit policy plays a vital role in the operational efficiency of credit departments as it reduces the ambiguity of credit departments’ functions by giving clear guidelines and instructions. It also reduces the loan default and speeds up accounts receivable turnover. This paper seeks to evaluate the effect of credit policy on the profitability of pharmaceutical firms listed on the Bombay Stock Exchange (BSE), using a balanced panel data of 82 pharmaceutical firms from 2008 to 2017. The number of days’ collection period and the number of days’ payable deferral period are chosen for measuring firms’ credit policy, while return on assets (ROA) is used for measuring firms’ profitability. It is found that the number of days’ collection period and the number of days’ payable deferral period have a negative and significant effect on the profitability of the pharmaceutical firms, while the control variables leverage, firm size, and age negatively impact the profitability of pharmaceutical firms. Financial managers in pharmaceutical companies should reduce the number of days’ collection period and increase the number of days’ deferral period to reduce the risk of bad debts. Furthermore, they should conduct a credit analysis to evaluate potential clients as it prevents bad debts.