The importance of working capital management in determining the profitability of the companies studied (automotive, and chemical) in the Tehran Stock Exchange

Document Type : Original Article

Authors

1 M.A, of Management (Business - Financial)Islamic Azad University Khorramshahr - Persian Gulf International branch, Iran

2 Assistant Professor of Islamic Azad University, Khorramshahr - Persian Gulf International branch, Iran

Abstract

Current study aimed to investigate the impact of the importance of working capital management. In this research, the repayment period of payable accounts, period of inventory turnover, period of receiving demands, and conversion of circle of cashes have been considered as components of working capital management. Data of the study were collected from 64 companies of car industries and producing parts, petrochemical industries and chemical materials, and stock exchange of Tehran between years of 2002 to 2013. Company size (with sale natural logarithm scale), sale growth, the ratio of financial debt, and liquidity have been considered as control variables. Using statistical regression method with combined data, research hypotheses were analyzed. Obtained results indicated that the period of receiving demands, period of inventory turnover, and conversion of circle of cashes, and repayment period of payable accounts have negative and significant impact on the profitability of companies. Therefore, managers can increase the profitability by reducing period of receiving demands, period of inventory turnover, and conversion of circle of cashes, and repayment period of payable accounts.

Keywords

Accounting and Auditing Research
Volume 10, Issue 38
July 2018
Pages 165-178

Files

Share

How to cite

Statistics