The Impacts Of Working Capital Management On Firms Profitability. Evidence From Selected Manufacturing Companies In Somali Regional State Ethiopian.

The purpose of this study is to investigate the impact of working capital managementrnon firms’ profitability. The study aims to examine the statistical significance betweenrncomponent of working capital management and firm’s profitability. In light of thisrnobjective the study adopted quantitative method of research approaches to test a seriesrnresearch hypothesis. Specifically, the study used survey of documentary analysis ofrncompanies’ audited financial statements. Stratified sampling design was employedrnbased on purposively of companies. Then companies were selected based onrnpurposively from each stratum’s to avoid biases. Consequently, the study selected arnsample of twenty five (25) companies for the period of six years (2009-2014) with therntotal of 150 observations. Data was analyzed on quantitative basis using Pearson’srncorrelation and pooled panel data regression models of cross-sectional and time seriesrndata were used for analysis. More over the study used gross operating profit asrndependent profitability variable. Accounts receivable Days, inventory holding Days,rnand accounts payable Days and cash conversion cycle are used as independentrnvariables. Also current ratio, debt ratio, firm size and sale growth as control variablernThe results showed that there is statistical significance negative relationship betweenrnprofitability and working capital management. It means that, companies managers canrncreate profits or value for their companies and shareholders by handling correctly therncash conversion cycle and keeping each different component of working capital to arnpossible optimum level. The researcher found that there is a significant negativernrelationship between liquidity and profitability. Moreover the study finds that there isrna significance negative relationship between size and firm profitability. Unlike, thernstudy found that there is negative relationship between debt used and firmsrnprofitability. Meanwhile the study found that there is positive relationship betweenrnfirm’s growths and firm’s profitabilityrnKeywords: working capital, working capital management, firm size, cash conversionrncycle and profitability

Get Full Work

Report copyright infringement or plagiarism