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How the working capital management influences companies' profitability: case study of Greek pharmaceutical companies

Author

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  • Dimitris Axiotis
  • Alina Hyz
  • Petros Kalantonis

Abstract

This study examines the relationship between working capital management and firm's profitability for the period before and after last economic crisis in Greece. We use as a sample Greek pharmaceutical industry. We examine as a dependent variable return on assets ratio, as explanatory variables: cash conversion cycle, days inventory outstanding, days sales outstanding and days payables outstanding and as control variables: firm's growth, leverage and firm's size. The results, based on the implementation of descriptive statistics, Pearson's correlation and regression analysis show: 1) positive relationship between profitability and cash conversion cycle, firm's size, growth and leverage; 2) negative relationship between profitability and components of cash conversion cycle. The impact of economic crisis on these relationships is also analysed.

Suggested Citation

  • Dimitris Axiotis & Alina Hyz & Petros Kalantonis, 2019. "How the working capital management influences companies' profitability: case study of Greek pharmaceutical companies," International Journal of Entrepreneurship and Small Business, Inderscience Enterprises Ltd, vol. 37(4), pages 530-544.
    • Handle: RePEc:ids:ijesbu:v:37:y:2019:i:4:p:530-544
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