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Chotia, V and Rao, N (2018) Infrastructure financing and economic growth in India: an empirical investigation. Journal of Financial Management of Property and Construction, 23(03), 258–73.

Enshassi, A, Ayash, A and Mohamed, S (2018) Factors driving contractors to implement energy management strategies in construction projects. Journal of Financial Management of Property and Construction, 23(03), 295–311.

Killingsworth, J and Mehany, M H (2018) Implications of collection period variance in the construction industry. Journal of Financial Management of Property and Construction, 23(03), 330–48.

  • Type: Journal Article
  • Keywords: Management accounting; Benchmarking; Construction financial management; Profit margins;
  • ISBN/ISSN: 1366-4387
  • URL: https://doi.org/10.1108/JFMPC-01-2018-0004
  • Abstract:
    Despite economic growth in the construction sector of the USA, profit margins are persistently low. An examination of collection practices of over 400 construction firms revealed a high number of firms with a collection period ratio above 30 days. This study aims to examines the variance between collection period ratio (days in accounts receivables, DAR) and days in accounts payables (DAP) and its correlation with profitability ratios [e.g. gross profit margin (GPM) and net profit margin (NPM)]. Design/methodology/approach Descriptive statistics were used to observe trends over three years of financial reporting (2013 through 2016), while correlation statistics were used to understand relationship or association between the different financial ratios and the collection period variance (CPV). Respondent firms were stratified by the North American Industry Classification System, company type and revenue size. Findings Conventional theory holds that increasing financial expenses because of collections negatively impacts profitability. Therefore, the hypothesis of the study suggested a statistical correlation between the CPV and profitability measures. Results of the study, however, supported the null hypothesis. Reasons for the lack of correlation are considered as well as necessary follow-up studies before rejecting the hypothesis. Originality/value No such study was found specific to the construction industry, and as such, this study contributes to better understanding the implications of extensive collection periods. Further, this study contradicts assumptions about the behavior of the construction industry and the causal relationship between extensive collection periods and profitability.

Sharma, R K (2018) Factors affecting financial leveraging for BSE listed real estate development companies in India. Journal of Financial Management of Property and Construction, 23(03), 274–94.

Umeokafor, N (2018) Community interventions in construction health and safety and the implications. Journal of Financial Management of Property and Construction, 23(03), 312–29.

Vahdatmanesh, M and Firouzi, A (2018) Price risk management in BOT railroad construction projects using financial derivatives. Journal of Financial Management of Property and Construction, 23(03), 349–62.