Working capital and profitability relationship

working capital and profitability relationship

Relationship between Efficiency Level of Working Capital Management and Profitability of Firms in the Textile Sector of Pakistan. This paper is first attempt to study the working capital management and profitability relationship in UAE's Real Estate and Construction. Effects of working capital management on a firm's profitability. .. available to me , there are no studies done on the relation between working capital.

International Journal of Commerce and Management,14 2 Available at SSRN An analysis of working capital management efficiency in telecommunication equipment industry.

Rivier academic journal, 3 2 The relationship between working capital management and profitability: Business and Economics Journal, 10, A panel analysis of liquidity constraints and firm investment. Journal of the American Statistical Association, 92 Mediterranean Journal of Social Sciences, 2 2 Examination the effects of working capital management an capability of profitability for listed companies on Tehran stock exchange.

Journal -Financial Accounting Research, 5, - Corporate returns and cash conversion cycles.

The Journal of Accounting and Management, Vol 2, No 3 (2012)

Journal of Economics and finance, 20 1 The determinants of corporate liquidity: Journal of financial and quantitative analysis, 33 03 Relationship between working capital management and profitability of listed companies in the Athens stock exchange.

Journal of financial management and analysis, 19 1 The cash conversion cycle and liquidity analysis of the food industry in Greece.

working capital and profitability relationship

Working capital and profitability: Impacts of equity financing on liquidity position of a firm. Applied Financial Economics, 15 6 Certain aspects of working capital in a construction company.

A study on relationship between working capital and profitability » Growing Science

Technological and Economic Development of Economy,12 3 However, the high inventory and loose trade credit policies lead to the locking of the money to the working capital [ 9 ]. In this context, firms that invest heavily in inventory and accounts receivables may be exposed to low profits [ 11 ]. Another component that has an impact on the working capital requirement is accounts payables.

Deferment of payments to suppliers can enable the firm to evaluate the product bought and may be a cheap and flexible funding source. But, postponing payments can be expensive, if the firm has got a discount for early payment [ 9 ]. The style of WCM may have a considerable influence on the profitability, risk, and liquidity of the firm [ 12 ].

Working Capital Management explained.

The firm that invests more in current assets is more liquid than a firm that does not invest. While lower investment in the working capital expressed as aggressive working capital policy is associated with higher returns and higher risk, more investment in the working capital expressed as conservative working capital policy is associated with lower return and lower risk [ 14 ]. The firm has to choose between aggressive and conservative working capital policies depending on its purpose [ 15 ].

Effective WCM is a significant factor affecting the survival of the firm, the continuity of its activities, and the maintenance of liquidity and profitability [ 16 ]. Excessive working capital like inadequate working capital has led many businesses to fail and prevent their growth [ 17 ]. The empirical results will help to gain knowledge by handling capital structure that is not straightforward and is dependent on working capital and its management.

Additionally, this study will explore how integrated and non-integrated listed companies strategize themselves when it comes to utilizing WCM and capital structure to improve profitability.

Practically, this study contributes to provide better understanding to the managers and enable them to apply WCM strategies and make sure the firm is able to meet the stakeholder requirements References Abor, J. The effect of capital structure on profitability: The journal of risk finance, 6 5 Management Accounting for Hospitality and Tourism. International Journal of Contemporary Hospitality Management, 13 3 Perceived relationship between corporate capital structure and firm value in Nigeria.

International Journal of Business and Social Science, 2 19 How firm characteristics affect capital structure: Managerial Finance, 33 5 Capital structure and corporate financing decisions: John Wiley and Sons. Asymmetric information in financial markets: Budgetary control and organization structure.

Journal of accounting research, E-commerce and Entrepreneurship Vol.

working capital and profitability relationship

Adaptive signal processing, hierarchy, and budgetary control in federal regulation. American Political Science Review, 90 02 Determinants of capital structure of Chinese-listed companies. Journal of Business Research, 57 12 The impact of structure, environment, and interdependence on the perceived usefulness of management accounting systems. Organizational structure, environment and performance: The role of strategic choice. Sociology, 6 11- The evolution of capital structure and operating performance after leveraged buyouts: Evidence from US corporate tax returns.

Journal of Financial Economics, 2 The determinants of working capital management practices: Does working capital management affect profitability of Belgian firms? Organizational culture and performance: Human Relations, 56 10 Perceived environmental uncertainty, organizational adaptation, and employee performance: A longitudinal study in professional accounting firms. Accounting, Organizations and Society, 7 1 Springer Science and Business Media. The relationship between working capital management and profitability: Evidence from the United States.

Business and Economics Journal, 10 1 Management accounting systems, perceived environmental uncertainty and organization structure: Accounting, Organizations and Society, 9 1 Managing people and organizations.

Gengage Learning, 1 The effects of management accounting systems, perceived environmental uncertainty and decentralization on managerial performance: Accounting, Organizations and Society, 19 4 International Journal of Managerial Finance, 10 1 Toward establishing a link between psychomotor task complexity and human information processing. Computers and industrial engineering, 31 1 Effects of working capital management on SME profitability.

International Journal of managerial finance, 3 2 Introduction to Islamic banking and finance Vol. Relationship between working capital management and profitability of listed companies in the Athens stock exchange. Journal of financial management and analysis, 19 1. Back to the beginning: The journal of finance, 63 4 The cost of capital, corporation finance and the theory of investment.

The American economic review, 48 3 The effect of market valuation and profitability in Malaysia. International Journal of Business and Management, 5 11p Iranian journal of pharmaceutical research: IJPR, 12 3 ,