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Impact of Working Capital on Financial Performance of Gulf Cooperation Council Firms

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  • Sumathi Kumaraswamy

    (Department of Economics and Finance, College of Business Administration, University of Bahrain, Kingdom of Bahrain.)

Abstract

As an extension of prior literatures that proved the relationship between working capital and firm performance, the present study aims to explore the impact of working capital on the firm performance of cement manufacturing Gulf Cooperation Council (GCC) firms for a period of 2008-2014. Four hypotheses pertaining to working capital components were investigated using linear regression models. The study identified positive relationship between inventory conversion period, average payment period with profitability and a negative relationship amid average collection period and firm profitability. The result of regression model indicates average collection period and inventory conversion period to be the most significant factors followed by average payment period. It shows that the profitability of the GCC cement manufacturing firms are greatly influenced by the average collection period and high inventory levels.

Suggested Citation

  • Sumathi Kumaraswamy, 2016. "Impact of Working Capital on Financial Performance of Gulf Cooperation Council Firms," International Journal of Economics and Financial Issues, Econjournals, vol. 6(3), pages 1136-1142.
    • Handle: RePEc:eco:journ1:2016-03-41
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    References listed on IDEAS

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    Cited by:

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    2. Sardar Shaker Ibrahim, 2018. "Impact of working capital management on profitability of Industrial sector in Iraq," International Journal of Finance & Banking Studies, Center for the Strategic Studies in Business and Finance, vol. 7(1), pages 27-32, January.
    3. Kah Chon, Ooi, 2019. "Impacts Of Firm-Specific Factors And Macroeconomic Factors Against Microsoft’S Performance," MPRA Paper 97254, University Library of Munich, Germany, revised 15 Nov 2019.
    4. Sam Sundar Chintha & Kollipara Vamsi Prasad, 2021. "A Study on the Impact of Cash Management on the Financial Performance of the Listed Manufacturing Companies from Muscat Securities Market, Sultanate of Oman," International Journal of Business and Administrative Studies, Professor Dr. Bahaudin G. Mujtaba, vol. 7(1), pages 25-35.
    5. Nelson Nkwasibwe & Elly Atuhereze Katsigaire & Bwesigye Tobias, 2023. "Accounts Payable Management and Financial Performance of Manufacturing Firms. A Case of Kazire Health Products Limited," International Journal of Research and Scientific Innovation, International Journal of Research and Scientific Innovation (IJRSI), vol. 10(2), pages 85-100, February.

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    More about this item

    Keywords

    Working Capital; Profitability; Gulf Cooperation Council; Average Collection Period; Inventory Conversion Period; Average Payment Period;
    All these keywords.

    JEL classification:

    • M1 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration
    • M4 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting

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