Abstract
This study is aimed at investigating the relationship between working capital management and profitability. This study is based on a panel data of 98 manufacturing firms listed on Ho Chi Minh City Stock Exchange for a period 6 years (from 2009 to 2014). The results of Pearson’s correlation and fixed effects multiple regression analysis found significant negative relationships between cash conversion cycle, net trade cycle, average collection period, average inventory period, average payment period and return on assets. So managers can improve the firm’s profitability by reducing cash conversion cycle, net trade cycle and it’s components to an optimal level. Further, the control variables including liquidity, leverage, firm size and firm growth also have significant effects on firm profitability. In particular, the findings also imply that managers can use net trade cycle instead of cash conversion cycle confidentially.
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 callDisclaimer: 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.
