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Net Working Capital Components And Firm Profitability In Croatia Based On Panel Data From 2016 To 2023

Author

Listed:
  • Maja Buljat

    (University of Applied Sciences „Baltazar“ Zapresic, Croatia)

  • Ana Skledar Corluka

    (University of Applied Sciences „Baltazar“ Zapresic, Croatia)

  • Alisa Bilal Zoric

    (University of Applied Sciences „Baltazar“ Zapresic, Croatia)

Abstract

This study examines the relationship between individual components of net working capital and corporate profitability in Croatia over the period from 2016 to 2023. The analysis focuses on two key profitability indicators, ROA and ROE, while the core working capital components included in the research comprise inventory, cash, receivables, and short-term liabilities. To account for the crisis period, a COVID_dummy variable was introduced to capture the direct pandemic impact years. Three methodological approaches were employed in the empirical analysis: classical OLS regression on transformed data, fixed effects panel regression, and dynamic GMM regression to address potential endogeneity and time dependence. The results indicate that receivables and cash have a positive influence on profitability, whereas short-term liabilities exhibit a negative effect. The impact of the COVID_dummy variable was not statistically significant. The findings confirm the importance of disaggregated analysis of working capital components in assessing firms’ financial performance and highlight the need to include additional control variables in future research.

Suggested Citation

  • Maja Buljat & Ana Skledar Corluka & Alisa Bilal Zoric, 2026. "Net Working Capital Components And Firm Profitability In Croatia Based On Panel Data From 2016 To 2023," Economic Thought and Practice, Department of Economics and Business, University of Dubrovnik, vol. 35(1), pages 35-52, june.
    • Handle: RePEc:avo:emipdu:v:35:y:2026:i:1:p:35-52
    DOI: 10.17818/EMIP/2025/42
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    Keywords

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    JEL classification:

    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • C33 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Models with Panel Data; Spatio-temporal Models
    • M41 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting - - - Accounting
    • O16 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Financial Markets; Saving and Capital Investment; Corporate Finance and Governance

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