Analysis of the effect of working capital management on. The objective of the current work is to provide empirical evidence about the effects of working capital management on profitability for a panel data of 48. From this study after analyzing the eight years data of 22 bangladeshi garments companies listed on dhaka stock exchange, authors have come to the conclusion that among the different component of working capital management, current liability to total asset and current ratio have significant effect on profitability of the bangladeshi garments. The effect of working capital management on profitability in. Working capital management efficiency is vital especially for manufacturing firms, where a major part of assets is composed of current assets 1. The effects of working capital management on firm profitability. The effect of working capital management on firm profitability evidence from turkey working capital management text and cases v. Agrim aggarwal and rahul chaudhary 2015, in their research paper aimed to study the effect of working capital on the profitability in indian firms. Effects of working capital management on sme profitability. To investigate this relationship the author collected secondary data from 8 flour factories in gedeo zone for the period of 2012 to 2016. Return on total assets represents the profitability of the industry and acts as a dependent variable to develop an empirical model in order to establish relationship between working capital management and profitability of the steel industry in india by using panel data regression.
This study adopts the expostfacto research design and employed the ordinary least square ols regression technique in analyzing. The effect of working capital management of ghana banks. The effect of working capital management on firm profitability. In this context, the objective of the current study is to provide empirical evidences about the effect of working capital management on profitability for a sample of 10 manufacturing and construction companies during the period 200320. The purpose of this study is to find out the effect of working capital management on company profitability. Effects of working capital management on company profitability. Working capital management refers to choosing the levels of mix of cash, marketable securities, receivables, inventories and short term financing. On the longterm, benefits of aiding customers during crisis. Evidence from pakistan global journal of management and business research volume xii issue xvii version i 2 y 2012 ear. Besides, industrial firms can contribute to raise the firms profitability by increasing inventory conversion period and sales. Findings show the existence of tradeoff working capital management profitability. Effects of working capital management and profitability. A sample of three 3 manufacturing companies listed on. Working capital management wcm is an important corporate financial decision since it directly affects the liquidity and profitability of the firm.
Pdf this research work is conducted in order to analyze the effect of working capital management on profitability, in detail, in the. Purpose the object of the research presented in this paper is to provide empirical evidence on the effects of working capital management on the profitability of a. Karadagli 12 also studied the effect of working capital management on the profitability of companies. Impact of working capital management on the profitability of public listed firms in the. This study aims to find out the impact of working capital management on profitability. Purpose the purpose of this paper is to provide empirical evidence on the effects of working capital management on the profitability of small and mediumsized portuguese firms. This research was done on 50 companies registered in kuala lumpur stock exchange klse, which. H1 there is positive impact of working capital management on profitability of firm. Pdf this study empirically examines the relationship between working capital management and profitability of acc cement company, the. Impact of working capital management on the profitability. Impact of working capital management on the performance.
The main purpose of this study is to examine the effect of working capital management on profitability. Pdf effect of working capital management on profitability. Return on assets is used as a proxy of profitability. They hypothesized that working capital management leads to improved profitability. A negative relationship exists between return on assets and payables deferral period, cash conversion cycle, the ratio of shortterm financial debts to shortterm debts, and the ratio of fixed assets to total assets while return on assets is positively related to inventory conversion period and sales growth. The effect of working capital management on profitability. This study used a sample of 54 firms listed in the middle east and west europe for the period of 201220. Our study also serves as a complement to the prior study of the working capital management of banks on profitability in general.
H2 there is positive impact of total assets on profitability of firm. The study sampled ten firms out of which two are listed in the nairobi securities exchange, one is government owned while the other seven are privately owned. The study aims at examining the statistical significance between companys working capital management and profitability. Cash conversion cycle and profitability, inconsistent with previous research. Impact of working capital management on profitability. This shows that working capital management is important with respect to profitability of a firm in the textile industry of pakistan. Effects of working capital management on profitability of. The object of the research presented in this paper is to provide empirical evidence on the effects of working capital management on the profitability of a sample of small and medium. The study tries to carry out an interindustry analysis, where the results of the different industries of the manufacturing sector are compared and contrasted to learn what impact working capital management has on profitability. Most of the studies combine cement manufacturing firms with other manufacturing firms hence a gap in literature, which needs to be sealed. Reza zadeh and heydarian 2010 explored the effect of working capital management on the profitability.
Karadagli 12 researched the effect of cash conversion cycle and net trade cycle, on. To empirically satisfy this, this paper examined working capital management and firms profitability in nigeria quoted firms on nigerian stock exchange nse. The primary objective of this research was to test the effects of working capital management on profitability. The period of study is 17 years, that is, 20002016. In light of this objective the study adopts quantitative approaches to test a series of research hypotheses. The purpose of this thesis is also to find out which working capital metrics and drivers affect profitability the most, and in which industries working capital management effects profitability. Thus, efficient working capital management is very important for smaller firms peel and wilson, 1996. Pdf effect of working capital management on company. The theory of risks and return has it that investment with more risk will result to more return. The purpose of this study is to examine the effect of. What is the effect of working capital management on. Impact of working capital management on firms performance.
When a business directly affects the profitability of the firm. The aim of this research is to test the effect of working capital management in the form of cash. Therefore, the present article tries to examine the impact of working capital management on profitability of the firms of indian steel industry. Pdf impact of working capital management on profitability. An important lesson therefore is that, prudent working capital management is critical for the profitability of firms of all sizes. Read online the effect of working capital management on profitability.
Thus, this study seeks to establish the effect of working capital management on profitability of oil and gas industry in kenya. Working capital policies, working capital management, firm profitability, financial constraints, financial crisis, public listed firms, amsterdam stock. Thus, this study examined the impact of working capital management on firms. Working capital management and firms profitability. Working capital management is one of the most important areas while making liquidity and profitability comparisons among firms eljelly, 2014. Mathuva 2009 examined the influence of working capital management components on corporate profitability of 30 kenyan listed firms. Pdf the effects of working capital management on the. Otherwise, the economic and political situation is very much alike, thus contributing to a good research environment. Pdf effects of working capital management on firms. Working capital entity takes the decisions regarding its current assets and management efficiency is vital especially for manufacturing current liabilities it can be termed as working capital firms. Melita, maria and petros 2010 empirically investigated the effect of working capital management on firms financial performance in an emerging market. Effects of working capital management on firm performance.
All books are in clear copy here, and all files are secure so dont worry about it. The study, which adopted a crosssectional survey research design, found that working capital. Their findings implied that the variables of the working capital management and profitability are inversely associated. Effect of working capital management on firm profitability. The purpose of this thesis is also to find out which working capital metrics and drivers affect profitability the most, and in which industries working capital management effects profitability the most. Impact of working capital management on the profitability of public.
The purpose of this study is to investigate the effect of working capital management on profitability. Over the years, it appeared that firms failed to subject shortterm investments to proper management thereby leading to either excessive or inadequate working capital which in turn affected their profitability. The effects of working capital management on the profitability of nigerian manufacturing firms article pdf available in journal of business economics and management 143 june 20 with 216 reads. The relation between the working capital management and profitability is examined using pearson correlation analyses and the effects on profitability is found out using the regression analyses by using a sample of 07 annual financial statements covering period 20072011 of listed commercial banks in sri lanka. Financial management practices and performance of smes in. The study aims to determine the effect of working capital management on the profitability of brewery firms in nigeria. Purpose the object of the research presented in this paper is to provide empirical evidence on the effects of working capital management on the profitability of a sample of small and mediumsized spanish firms. Analysis of the effect of working capital management on profitability. The authors tested the effects of working capital management. Effect of working capital management on profitability. The study aims to examine the statistical significance between component of working capital management and firms profitability. Our study is the latest attempt to estimate working capital management of ghana banks with profitability using the fixed and random effect estimators. The working capital management is considered to be a vital issue in liquidity and shortterm investment decision of the firm. This site is like a library, you could find million book here by using search box in the header.
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