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WORKING CAPITAL

MANAGEMENT&

PROFITABILITY

JIBANANDA SAMAL 31MANOJ KUMAR PRADHAN 37SOUVESH SHUBY JENA - 51

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CONTENTS The Factors in management of working capital

The Paper The Effect of Working CapitalManagement on Firm Profitability: Evidencefrom Turkey

The Paper The Relationship Between WorkingCapital Management And Profitability EvidenceFrom The United States

Comparison of the two views.

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The Effect of Working Capital Management on FirmProfitability: Evidence from Turkey

F Samilpglu and K DemirgunesDepart ment of Business Adminstration, University of Aksaray, TurkeyDepart ment of Business Adminstration, University of Nigde, Turkey

The Relationship Between Working CapitalManagement And Profitability

Evidence From The United StatesAmarjit Gill, Nahum Biger, Neil Mathur

College of Business Administration, TUI University, CA 90630, USA

Academic Center Carmel, Shaar Palmer 4, Haifa, Israel 33031Simon Fraser University, 515 West Hastings Street, Vancouver, BC V6B-5K3,

Canada

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FACTORS IN WORKING

CAPITAL

The way that components of wc is managed hasa significant impact on profitability of firms

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Study was conducted to investigate the effect ofworking capital management on firm profitability

A sample of Istanbul Stock Exchange listedmanufacturing companies for the period of 1998-2007was taken

Quarterly financial statements of listed companies were

taken from ISE data base

Multiple regression analysis of 5843 firms were done

Total seven independent variables were taken for the

study

Evidence from Turkey

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Evidence form USA It was seen from the previous literature reviews, that

there is impact of WC management on firms profitability. Still there still is ambiguity regarding the appropriate

variables that might serve as proxies for working capitalmanagement.

Hence the study was done to investigates therelationship between a set of such variables and theprofitability of a sample of American manufacturing firms.

A sample of 88 American manufacturing companieslisted on the New York Stock Exchange for the period of3 years from 2005-2007 was taken

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AR = Accounts receivables

AP = Accounts payables

INV = Inventory

CCC = Cash conversion cycle

LnS = Firm size

FD = Financial debt ratio

FFA = Fixed financial asset ratio Firm size, financial debt ratio, and fixed financial

asset ratio were used as control variables.

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COMPARISION BETWEEN BOTHSTUDY

TURKEY STUDY

ACRP, INVP & LEV HASsignificant negativerelationship betweenprofitability.

Firms growth has positively

significant relationship withprofitability

CCC, SIZE & FIX have nosignificant affect on

profitability.

USA STUDY

Account receivables hasnegative relationship withprofitability

No statistically significantrelationship between days of

accounts payable andprofitability of the firm.

Positive relationship betweencash conversion cycle and

gross operating profit No significant relationship

between firm size and its grossoperating profit ratio.

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