Working capital management and its impacts on profitability: the case of small and medium food enterprises in Nakhon Ratchasima, Thailand Online publication date: Mon, 20-May-2019
by Sareeya Wichitsathian
International Journal of Economic Policy in Emerging Economies (IJEPEE), Vol. 12, No. 2, 2019
Abstract: This is mixed qualitative and quantitative research of SMEs food enterprises which conducted in Thailand. Qualitative research is applied aims to investigate WCM system of firms. The results reveal that food enterprises generally set goal considered liquidity, risk and profits. Moreover, businesses have developed the suitable policy and WCM strategy and are able to achieve the WCM goal in operational evaluation. Second phrase using path analysis focuses on the impact of WCM on profitability by using financial ratios and time period of cash as indicators to assess WCM efficiency of firms. The result shows that the proposed model has an impact on profitability and conforms to the collected empirical data. The company is able to increase its profitability by aiming at high liquidity in working capital management. In addition, shortening receivable collection period and inventory conversion period along with extending payable deferral period help also to gain higher profit.
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