An empirical study on the impact of working capital management on profitability of the selected companies included in the list of Philippine stock exchange classified as industrial sector for 2008-2011
Through appropriate handling and supervision of assets, profit can be maximized of companies. One of the areas that companies should give focus on is working capital management. Failure to deal properly with short-term assets and liabilities was determined by various literatures to have a significan...
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| Main Authors: | , , , |
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| Format: | text |
| Language: | English |
| Published: |
Animo Repository
2012
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| Online Access: | https://animorepository.dlsu.edu.ph/etd_bachelors/10918 |
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| Institution: | De La Salle University |
| Language: | English |
| Summary: | Through appropriate handling and supervision of assets, profit can be maximized of companies. One of the areas that companies should give focus on is working capital management. Failure to deal properly with short-term assets and liabilities was determined by various literatures to have a significant effect on profitability.
This research was conducted with the objective of determining the impact of working capital management. Studies conducted by several researchers showed varying results and there also a lack of studies made in the Philippines setting. This led the group to have a study conducted on 30 selected companies included in the list of Philippine Stock Exchange under Industrial sector for 2008-2011.
Panel data regression analysis was used to assess working capital management's impact on profitability. Results indicated that the independent variables did not have a significant impact to both Return on Working Capital and Return on Assets, but Cash Conversion Cycle (CCC) and Average Collection Period have a strong negative impact to Net Profit Margin (NPM).
The researchers concluded CCC to be significantly related to NPM since working capital management affects the efficiency of revenue generation, but not necessarily that of asset utilization. The results in this study are useful in helping industrial companies in assessing their strategies and objective with regard to working capital management in order to effectively have improvements in profitability. |
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