The Relationship between Working Capital Management and Profitability: A Vietnam Case

International Research Journal of Finance and Economics ISSN Issue 01/2010; 49:1450-2887.

ABSTRACT The working capital management plays an important role for success or failure of firm in business because of its effect on firm's profitability as well on liquidity. The study is based on secondary data collected from listed firms in Vietnam stock market for the period of 2006-2008 with an attempt to investigate the relationship existing between profitability, the cash conversion cycle and its components for listed firms in Vietnam stock market. Our finding shows that there is a strong negative relationship between profitability, measured through gross operating profit, and the cash conversion cycle. This means that as the cash conversion cycle increases, it will lead to declining of profitability of firm. Therefore, the managers can create a positive value for the shareholders by handling the adequate cash conversion cycle and keeping each different component to an optimum level.

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    ABSTRACT: Achieving high performance is a crucial objective aimed by the management of anycompany. The accurate and efficient economic resources management contributes decisively toimproving performance. The paper presents an econometric model that shows the link betweeneconomic performance and patrimony management reflected through a series of indicators, such as thereturn on current assets, fixed assets ratio and the funding structure of capitals (financial leverage). Interms of research tools, we used techniques of regression analysis based on specialized software. Theobtained results allow drawing conclusions about the elements upon which decision makers shouldintervene in order to increase economic performance.
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    ABSTRACT: The main objective of this study is to investigate the impact of working capital management policies (aggressive and conservative policies) on the firms' profitability and value. Using annual data for 57 industrial firms listed in Amman Stocks Market for the period of 2001 to 2009, the results show that following a conservative investment policy has a positive impact on a firm's profitability and value. However following the aggressive financing policy has a negative impact on the firm's profitability and value. Finally, this study finds that firm Size, firm Growth and GDP Growth has a positive impact on the firm's profitability and value with no effect of financial leverage. The Impact of working capital management policies on firms' profitability and value: the case of Jordan.
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    ABSTRACT: Working capital management is an essential element in short-term financing and cash flow. Previous studies have also discussed the impact of working capital management on the relative profitability of a company. In this paper, we study the effect of the management of working capital components (inventories, accounts receivable and accounts payable) on profitability in the context of the value chain. The findings suggest that the components of working capital should be managed together to achieve positive effects on profitability. Companies also need to take account of the other companies of the value chain in their management of working capital components.
    International Journal of Managerial and Financial Accounting 01/2011; 3(4):348-366. DOI:10.1504/IJMFA.2011.043333


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