scholarly journals The Impact of Working Capital Management on Firm Profitability: Evidence from Selected Wholesale Trade Firms in Addis Ababa, Ethiopia

2021 ◽  
Keyword(s):  
Addis Ababa ◽  
Capital Management ◽  
Working Capital ◽  
Wholesale Trade ◽  
Working Capital Management ◽  
Firm Profitability ◽  
The Impact

scholarly journals The Impact of Working Capital Management on Firm Profitability: Empirical Evidence from the Polish Listed Firms

2020 ◽  
Vol 14 (1) ◽  
pp. 9
Author(s):  
Sorin Anton ◽  
Anca Afloarei Nucu
Keyword(s):  
Empirical Evidence ◽  
Ordinary Least Squares ◽  
Optimum Level ◽  
Capital Management ◽  
Working Capital ◽  
Working Capital Management ◽  
Listed Firms ◽  
Firm Profitability ◽  
Break Even Point ◽  
The Impact

The purpose of this study is to investigate the relationship between working capital and firm profitability for a sample of 719 Polish listed firms over the period of 2007–2016. The scarcity of empirical evidence for emerging economies and the importance of working capital efficiency motivate the research on the working capital–financial performance relationship. The paper adopts a quantitative approach using different panel data techniques (ordinary least squares, fixed effects, and panel-corrected standard errors models). The empirical results report an inverted U-shape relationship between working capital level and firm profitability, meaning that working capital has a positive effect on the profitability of Polish firms to a break-even point (optimum level). After the break-even point, working capital starts to negatively affect firm profitability. The study brings theoretical and practical contributions. It extends and complements the literature on the field by highlighting new evidence on the non-linear interrelation between working capital management (WCM) and corporate performance in Poland. From the practitioners’ perspective, the results highlight the importance of WCM for firm profitability.

Working Capital Management, Macroeconomic Impacts, and Firm Profitability: Evidence from Indian SMEs

2020 ◽  
Vol 9 (1) ◽  
pp. 144-158
Author(s):  
Ajaya Kumar Panda ◽  
Swagatika Nanda ◽  
Pradiptarathi Panda
Keyword(s):  
Inventory Management ◽  
Negative Relationship ◽  
Least Square ◽  
Small Scale ◽  
Capital Management ◽  
Working Capital ◽  
Working Capital Management ◽  
Firm Profitability ◽  
Relationship Of ◽  
The Impact

The present study investigates the relationship between working capital management and SME profitability. It also analyzes the impact of macroeconomic impulses on firm profitability through efficient management of working capital in the case of Indian small and medium scale enterprises over the time period spanning from 2010 to 2017 using Feasible Generalized Least Square (FGLS) regression models. The study concludes the negative relationship of account receivables together with a positive relationship of inventories and account payables with SME profitability. It implies the firm managers can maximize SME’s profitability by converting the credit sales to cash as early as possible, by increasing the days of accounts payable and following a conservative inventory management strategy. Changes in economic growth and commercial bank advances to small scale industries are the key macroeconomic determinants that are impacting SME profitability. The results from this paper may guide the firm managers to shape their working capital management strategies to maximize profitability. Policymakers may find the study interesting to identify the macroeconomic parameters that significantly influence Indian SMEs.

Working Capital Policy for Wholesale Trade Companies

2020 ◽  
Vol 2020 (3) ◽  
pp. 78-105
Author(s):  
Svetlana Makarova ◽  
Elena Ermakova
Keyword(s):  
Retail Trade ◽  
Strong Impact ◽  
Capital Management ◽  
Working Capital ◽  
Economic Sectors ◽  
Metal Production ◽  
Wholesale Trade ◽  
Working Capital Management ◽  
Cash Conversion Cycle ◽  
The Impact

This article contains a new approach to working capital management which influences significantly the profitability and liquidity of companies. The impact of working capital management on financial results is regarded mostly theoretically in Russian literature, while in numerous foreign articles empirical results are controversial. The article presents the empirical research on the basis of 8890 Russian wholesale trade companies over the period of 2014- 2018, which reveals a non-linear relation between the profitability and cash conversion cycle. Similar relation is also revealed for 2290 Russian retail companies, 2320 Russian metal production companies and 1760 construction companies. As a result, we proved the existence of such a cash conversion cycle which provides maximum profitability for different economic sectors. This cash conversion cycle equals 19 days for wholesale trade, 9 days for retail trade, 38 days for construction and 43 for metal production. Moreover, the formula of cash conversion cycle is modified to show how the desired cash conversion cycle may be achieved. This formula demonstrates a strong impact of working capital policy on cash conversion cycle and proves the importance of coherent working capital policy. The results may be useful in the working capital management to provide an increase in profitability combined with maintenance of chosen liquidity level.

scholarly journals The Impact of Working Capital Management on Firm Profitability and Value

2021 ◽  
Vol 5 (1) ◽  
pp. 34
Author(s):  
A.G.D.T. Amarasekara ◽  
R.M.S.S. Rathnayake ◽  
C. Pathirawasam
Keyword(s):  
Capital Management ◽  
Working Capital ◽  
Working Capital Management ◽  
Firm Profitability ◽  
The Impact

scholarly journals THE EFFECT OF PROFITABILITY AND RISK MANAGEMENT ON WORKING CAPITAL MANAGEMENT

2011 ◽  
Vol 10 (1) ◽  
Author(s):  
Mudji Utami
Keyword(s):  
Risk Management ◽  
Regression Analysis ◽  
Manufacturing Sector ◽  
Financial Statements ◽  
Business Risk ◽  
Capital Management ◽  
Working Capital ◽  
Working Capital Management ◽  
Firm Profitability ◽  
The Impact

This study aims to examine the impact of working capital management on profitability and risks of business companies. Furthermore, this study also examines what are the differences of working capital management industries in the manufacturing sector. Some researchers proved that influence of working capital management on profitability (Rahemanand Nasr 2007; Marc Deloof, 2003 and Hadori, 2005). In addition, Gitman (2009) also states that working capital management has an impact on firm profitability and risk. Business risk of each industry is different, thus working capital management will differ among industries. This study used data from 2001 until 2007 at the manufacturing sector firms which have coherent of annually financial statements during the study period and have been audited. In order to test the hypothesis, this study used regression analysis and analysis of variance. The research proves that working capital management affects profitability and risk of firm manufacturing sector during the period 2001-2007. Moreover, it also proves that there is a difference among working capital management industries in the manufacturing sector.

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