Abstract
The current study focused on the impact of working capital management on the financial profitability of Egyptian companies which lasting at EGX according two dimensional analyses; these dimensional are real assets level measured according to "Return on Assets" with financial assets level measured according to "TOBIN Q" during 2011 to 2018 for 23 companies.The study used unbalanced panel data analysis to examining the impact of the working capital management on the profitability. Finally, the study found two dimensional for the impact of working capital management and corporate's profitability; first according to Cost-Benefits analysis at real assets level measured through "Return on Assets"; second according to Risk Return Trade Off at financial assets level measured through "TOBIN Q".
Highlights
Working capital management is important to finance which takes considerable time to achieve the perfect balance between profitability and liquidity, and its place in the performance corporate and common stock
The company’s stock is important in the measure where it generates cash flow; the timing of cash flows matters; the money receive is much better as it can be reinvested to produce extra profits or otherwise returned to investor; Thanks to these three realities, managers will raise stock prices for their businesses through improved cash flows and accelerated collection and risk reduction, Working capital management is necessary if a company wants to compete, but sometimes found a conflict between working Capital Terminology like Working capital, sometimes called gross working capital" the current assets used in operations"; Net working capital " current assets minus current liabilities" and Net operating working capital (NOWC) " operating current assets minus operating current liabilities"
Working capital is the corporate's power for conducting the daily operations activities according to consists of the current assets and the current liabilities; efficient working capital management is becoming important for corporates in cases of increased economic uncertainty; so There are multiple studies related to working capital management (WCM), ales the real two main attitudes in the working capital studies, the first for small and medium enterprises (Pais and Gama, 2015; Afrifa and Padachi, 2016; Tran et al, 2017; Afrifa and Tingbani, 2018; Elbadry 2018) and the second one for corporate (Aktas et al, 2015; Lyngstadaas & Berg 2016; Kasozi 2017), the method in which working capital is managed will have an impact on the company’s profitability
Summary
Working capital management is important to finance which takes considerable time to achieve the perfect balance between profitability and liquidity, and its place in the performance corporate and common stock. The company will borrow to purchase the stock, sell the inventory to repay the bank loan, and restart the process under the principle of working capital management. The definition is extended to more dynamic organizations in which the efficiency of the working capital management of a company was evaluated. Sell goods on loan and receive receivables throughout a period. This process is known as the Cash Conversion Cycle; the working capital strategy aims at reducing the time between product cash spending and sales money accumulation (Brigham and Ehrhardt, 2002).
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