Effects of working capital management on firm profitability: empirical evidence from Sri Lanka Online publication date: Tue, 17-Feb-2015
by Athambawa Jahfer
International Journal of Managerial and Financial Accounting (IJMFA), Vol. 7, No. 1, 2015
Abstract: This paper investigates the effects of working capital management on profitability of manufacturing companies in Sri Lanka for the period 2008 to 2013. It was analysed using both pooled ordinary least squared and fixed effect model. Working capital management were measured using accounts receivable, accounts payable, inventory period, cash conversion cycle and net trading cycle. Gross operating profit was used to measure the profitability. This study finds that managers can create value by reducing accounts receivable and net trading cycle and maintaining reasonable inventory level. The study also finds a significant negative relationship between accounts payable and profitability which is consistent with the view that less profitable firms wait longer to pay their bills. There is no evidence to prove the existence of significant relationship between cash conversion cycle and profitability but there is negative association.
Existing subscribers:
Go to Inderscience Online Journals to access the Full Text of this article.
If you are not a subscriber and you just want to read the full contents of this article, buy online access here.Complimentary Subscribers, Editors or Members of the Editorial Board of the International Journal of Managerial and Financial Accounting (IJMFA):
Login with your Inderscience username and password:
Want to subscribe?
A subscription gives you complete access to all articles in the current issue, as well as to all articles in the previous three years (where applicable). See our Orders page to subscribe.
If you still need assistance, please email subs@inderscience.com