Working capital management and corporate performance： Case of Malaysia

Working capital always being disregard in financial decision making since it involve investment and financing in short term period. However, it is an important component in firm financial management decision. An optimal working capital management is expected to contribute positively to the creation of firm value. To reach optimal working capital management firm manager should control the trade off between profitability and liquidity accurately. The intention of this study is to examine the relationship between working capital management and firm profitability. Cash conversion cycle is used as measure of working capital management. This study is used panel data of 1628 firm-year for the period of 1996-2006 that consist of six different economic sectors which are listed in Bursa Malaysia. The coefficient results of Pooled OLS regression analysis provide a strong negative significant relationship between cash conversion cycle and firm profitability. This reveals that reducing cash conversion period results to profitability increase. Thus, in purpose to create shareholder value, firm manager should concern on shorten of cash conversion cycle till optimal level is achieved.

Relationship Between Working Capital Management and Profitability in Turkey Industrial Listed Companies

The present study investigated the effect of working capital management component on corporate profitability. A sample of 106 firms listed on Borsa Istanbul Stock Exchange （BIST） for the period of 2003-2013 was used. The secondary data for analysis were taken from Bloomberg＇s Database. The present study aims to explore the effect of working capital management components on corporate profitability. We observed that there was a negative correlation between gross operating profit and accounts receivables （A/R）. We also found that there was a positive correlation between gross operating profit and number of days inventory. But they did not affect the profitability of firms in the study at a significant level.

The Relationship Between Working Capital Management and Profitability of Companies Listed on the Johannesburg Stock Exchange

Efficient working capital management is an integral component of the overall corporate strategy to create shareholders＇ wealth. This paper seeks to extend findings regarding the relationship between working capital management and profitability. A sample of 69 companies listed on the Johannesburg Stock Exchange （JSE） for the period from 1998 to 2008 was selected. The results revealed a statistically significant negative relationship among profitability （as measured through gross operating profit）, the cash conversion cycle （CCC）, and number of days accounts receivable （AR）. The results also revealed a positive and significant relationship among profitability, the number of days accounts payable （AP）, and the number of days inventory （INV）. The results suggested that managers could increase their company＇s profitability by effectively managing the CCC and its components.