Abstract
The effective management of working capital is crucial for all companies. Key elements of working capital management include days sales outstanding (DSO), days inventory outstanding (DIO), days payable outstanding (DPO), and cash conversion cycle (CCC). A study conducted on 332 Czech companies, 20 of which were certified by the EFQM (European Foundation for Quality Management) Model, investigated how these components of working capital management impact a company's profitability. Two regression models were utilized for testing - pooled regression and maximum likelihood estimation (MLE). The results indicated that all components of working capital management have a negative effect on profitability. Interestingly, the interaction between EFQM certified companies and working capital components had a positive impact on profitability, suggesting a beneficial relationship between these components and profitability for certified firms. However, it was found that receiving a quality certificate/award from the EFQM Excellence Model actually decreased a company's profitability. Keywords Working capital, Firm profitability CCC, EFQM, Czech firms
Talk to us
Join us for a 30 min session where you can share your feedback and ask us any queries you have
Schedule a callMore From: INTERANTIONAL JOURNAL OF SCIENTIFIC RESEARCH IN ENGINEERING AND MANAGEMENT
Disclaimer: All third-party content on this website/platform is and will remain the property of their respective owners and is provided on "as is" basis without any warranties, express or implied. Use of third-party content does not indicate any affiliation, sponsorship with or endorsement by them. Any references to third-party content is to identify the corresponding services and shall be considered fair use under The CopyrightLaw.
