Impact Of Working Capital Management On Firms Performance Evidence From Large Taxpayer Printing Firms In Addis Ababa Ethiopia

A well managed working capital promotes a firm’s profitability and it also acts in favor forrnthe growth of shareholders value. Many researchers have indicated that, firms cannot survivernand continue their daily operations without sufficient level of working capital. Moreover,rnlarge numbers of business failures in the past have been blamed on the inability of thernfinancial manager in managing working capital of firms. Previous researches have examinedrnthe relationship between working capital management and firm’s performance. The mainrnobjective of this study was to investigate the impact of working capital management onrnprofitability of large tax payer printing firms. This study examined the impact of workingrncapital management on firm’s performance by using financial statements of large taxpayerrnprinting firms in Addis Ababa, Ethiopia from the period of 2011 to 2015. In this study, returnrnon asset (ROA) was used as a dependent variable while cash conversion period, Accountsrncollection period, inventory conversion period, current ratio and firms size were used as anrnindependent variables. The data was analyzed using descriptive and regression analysisrnmethod. Statistical analysis was computed by using Eviews version 9. In agreement with thernhypothesis of this research, the regression analysis has shown that working capitalrnmanagement components have a significant impact on firm’s performance. The result of thisrnstudy has also indicated that inventory conversion period, account collection period andrncurrent ratio have significant negative relation with profitability but positive significantrnrelationship between cash conversion cycle and profitability. However, the researcher foundrninsignificant negative relationship between the size of firm and profitability. Therefore,rnmanagers of large taxpayer printing firms can maximize firm’s value and profitability byrnimproving management of working capital component at optimal level.rnKey terms: Working capital management, Printing firms, profitability

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