Management of working capital - the Achilles heel of small and medium enterprises: the case of Greece

The main purpose of this paper is an empirical investigation of the relationship between working capital management and firms' performance in Small and Medium Enterprises (SMEs) in Greece during the crisis period. We used a data set of 459 SMEs split-up over eight sectors of economic activities according to the European NACE classification scheme. The research covers the period of 2008-2012, which gives the five-year period of observation of financial results of selected companies. The efficiency of working capital management was measured by accounts receivables turnover, inventories turnover, accounts payables turnover and cash conversion cycle. Return on assets was used as the profitability variable. The study is based on correlation and regression analysis to analyse data. The results indicate that all working capital components significantly affect Greek SMEs profitability. The paper is organised as follows: in the next section we briefly present the problem based on literature review. This is followed by the presentation of research methodology and the data sources used in the analysis. The results are presented and discussed in Section 3. Last section summarises the conclusions and presents further opportunities for research.