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Impact Of Working Capital Management On Profitability Of Macedonian Industrial Companies

Author

Listed:
  • NAUMOSKI, Aleksandar

    (Faculty of Economics, Ss. Cyril and Methodius University in Skopje, Republic of North Macedonia.)

  • NAUMOVSKA, Maja

    (TAV Macedonia DOOEL, Skopje, Republic of North Macedonia.)

Abstract

Efficient and effective working capital management is crucial given its impact on the company's profitability. The focus of the research in this paper is the impact of individual components of working capital on the profitability of industrial companies. The research was conducted on a sample of industrial companies listed on the Macedonian Stock Exchange using their accounting data for a period covering ten years 2010 - 2019 by applying a panel regression analysis. We found that corporate profitability increases with increasing account receivable period, account payables payment period, company size, sales growth, and volatility in net operating profit. Additionally, profitability increases with decreasing in the cash conversion cycle and financial leverage. Inventories conversion period and fixed financial assets do not show a statistically significant relationship with the company profitability.

Suggested Citation

  • NAUMOSKI, Aleksandar & NAUMOVSKA, Maja, 2022. "Impact Of Working Capital Management On Profitability Of Macedonian Industrial Companies," Studii Financiare (Financial Studies), Centre of Financial and Monetary Research "Victor Slavescu", vol. 26(2), pages 18-36, June.
    • Handle: RePEc:vls:finstu:v:26:y:2022:i:2:p:18-36
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    References listed on IDEAS

    as
    1. Preve, Lorenzo & Sarria-Allende, Virginia, 2010. "Working Capital Management," OUP Catalogue, Oxford University Press, number 9780199737413.
    2. Cecilia Ricci & Nino Vito, 2000. "International working capital practices in the UK," European Financial Management, European Financial Management Association, vol. 6(1), pages 69-84, March.
    3. Marc Deloof, 2003. "Does Working Capital Management Affect Profitability of Belgian Firms?," Journal of Business Finance & Accounting, Wiley Blackwell, vol. 30(3‐4), pages 573-588, April.
    4. Marc Deloof, 2003. "Does Working Capital Management Affect Profitability of Belgian Firms?," Journal of Business Finance & Accounting, Wiley Blackwell, vol. 30(3-4), pages 573-588.
    5. Pedro Juan García‐Teruel & Pedro Martínez‐Solano, 2007. "Effects of working capital management on SME profitability," International Journal of Managerial Finance, Emerald Group Publishing Limited, vol. 3(2), pages 164-177, April.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    corporate finance; operating cycle; cash cycle; panel data analysis; North Macedonia;
    All these keywords.

    JEL classification:

    • G31 - Financial Economics - - Corporate Finance and Governance - - - Capital Budgeting; Fixed Investment and Inventory Studies
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles

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