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Research Journal of Finance and Economics ISSN 1450-2887 Issue 49 (2010) © EuroJournals Publishing, Inc. 2010 http://www. eurojournals. com/finance. htm The Relationship between Working Capital Management and Profitability: A Vietnam Case Huynh Phuong Dong Faculty of Accounting, Danang University of Economics, Vietnam E-mail: [email protected] com Tel: +84989392392 Jyh-tay Su Assistant professor at Southern Taiwan University, No. 1 NanTai St Yong Kang City, Tainan County, Taiwan R. O. C E-mail: [email protected] stut. edu. w 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. Keywords: Corporate Profitability, Working Capital management, Vietnam stock market. 1. Introduction Assets in commercial firm consist of two kinds: fixed assets and current assets. Fixed assets includeland, building, plant, furniture, etc.

Investment in these assets represents that of part of firm’s capital, which is permanently blocked on a permanent or fixed basis and is also called fixed capital that generates productive capacity. The form of these assets does not change, in the normal course. In the contrast, current assets consist of raw materials, work-in-progress, finished goods, bills receivables, cash, bank balance, etc. These assets are bought for the purpose of production and sales, like raw material into semi-finished products, semi- finished products into finished products, finished products nto debtors and debtors turned over cash or bills receivables. The fixed assets are used in increasing production of an organization and the current assets are utilized in using the fixed assets for day to day working. Therefore, the current assets, called working capital, may be regarded as the lifeblood of a business enterprise. It refers to that part of the firm’s capital, which is required for financing short-term. The management of this working capital is known as working capital management.

The basis objective of working capital management is to manage firm’s current assets and current liabilities, in International Research Journal of Finance and Economics – Issue 49 (2010) 60 such a way, that working capital are maintained, at a satisfactory level. The working capital should be neither more nor less, but just adequate. Working capital management plays an important role in a firm’s profitability and risk as well as its value (Smith, 1980). There are a lot of reasons for the importance of working capital management.

For a typical manufacturing firm, the current assets account for over half of its total assets. For a distribution company, they account for even more. Excessive levels of current assets can easily result in a firm’s realizing a substandard return on investment. However, Van Horne and Wachowicz (2004) point out that excessive level of current assets may have a negative effect of a firm’s profitability, whereas a low level of current assets may lead to lowers of liquidity and stock-outs, resulting in difficulties in maintaining smooth operations.

Efficient management of working capital plays an important role of overall corporate strategy in order to create shareholder value. Working capital is regarded as the result of the time lag between the expenditure for the purchase of raw material and the collection for the sale of the finished good. The way of working capital management can have a significant impact on both the liquidity and profitability of the company (Shin and Soenen, 1998). The main purpose of any firm is maximum the profit. But, maintaining liquidity of the firm also is an important objective.

The problem is that increasing profits at the cost of liquidity can bring serious problems to the firm. Thus, strategy of firm must be a balance between these two objectives of the firms. Because the importance of profit and liquidity are the same so, one objective should not be at cost of the other. If we ignore about profit, we cannot survive for a longer period. Conversely, if we do not care about liquidity, we may face the problem of insolvency. For these reasons working capital management should be given proper consideration and will ultimately affect the profitability of the firm.

Working capital management involves planning and controlling current assets and current liabilities in a manner that eliminates the risk of inability to meet due short term obligations on the one hand and avoid excessive investment in these assets on the other hand( Eljelly,2004). Lamberson (1995) showed that working capital management has become one of the most important issues in organization, where many financial managers are finding it difficult to identify the important drivers of working capital and the optimum level of working capital.

As a result, companies can minimize risk and improve their overall performance if they can understand the role and determinants of working capital. A firm may choose an aggressive working capital management policy with a low level of current assets as percentage of total assets, or it may also be used for the financing decisions of the firm in the form of high level of current liabilities as percentage of total liabilities (Afza and Nazir, 2009). Keeping an optimal balance among each of the working capital components is the main objective of working capital management.

Business success heavily depends on the ability of the financial managers to effectively manage receivables, inventory, and payables (Filbeck and Krueger, 2005). Firms can decrease their financing costs and raise the funds available for expansion projects by minimizing the amount of investment tied up in current assets. Lamberson (1995) indicated that most of the financial managers’ time and efforts are consumed in identifying the non-optimal levels of current assets and liabilities and bringing them to optimal levels.

An optimal level of working capital is a balance between risk and efficiency. It asks continuous monitoring to maintain the optimum level of various components of working capital, such as cash receivables, inventory and payables (Afza and Nazir, 2009). A popular measure of working capital management is the cash conversion cycle, which is defined as the sum of days of sales outstanding (average collection period) and days of sales in inventory less days of payables outstanding (Keown et al, 2003).

The longer this time lag, the larger the investment in working capital. A longer cash conversion cycle might increase profitability because it leads to higher sales. However, corporate profitability might also decrease with the cash conversion cycle, if the costs of higher investment in working capital is higher and rises faster than the benefits of holding more inventories and granting more inventories and trade credit to customers (Deloof, 2003).

Lastly, working capital management plays an important role in managerial enterprise, it may impact to success or failure of firm in business because working capital management affect to the profitability of the firm. The thesis is expected to contribute to better understanding of relationship 61 International Research Journal of Finance and Economics – Issue 49 (2010) between working capital management and profitability in order to help managers take a lot of solutions to create value for their shareholders, especially in emerging markets like Vietnam. . Literature Review Many previous researches have indicated the relationship between working capital management and profitability of firm in different environments. Shin and Soenen (1998) used a sample of 58,985 firm’s years covering the period 1975-1994 in order to investigate the relationship between net-trade cycle that was used to measured efficiency of working capital management and corporate profitability. In all cases, they found a strong negative relationship between the length of the firm’s net-trade cycle and its profitability.

Deloof (2003) investigated the relationship between working capital management and corporate profitability for a sample of 1,009 large Belgian non-financial firms for the 1992-1996 periods. The result from analysis showed that there was a negative between profitability that was measured by gross operating income and cash conversion cycle as well number of day’s accounts receivable and inventories. He suggested that managers can increase corporate profitability by reducing the number of day’s accounts receivable and inventories. Less profitable firms waited longer to pay their bills.

Singh and Pandey (2008) had an attempt to study the working capital components and the impact of working capital management on profitability of Hindalco Industries Limited for period from 1990 to 2007. Results of the study showed that current ratio, liquid ratio, receivables turnover ratio and working capital to total assets ratio had statistically significant impact on the profitability of Hindalco Industries Limited. Lazaridis and Tryfonidis (2006) have investigated relationship between working capital management and corporate profitability of listed company in the Athens Stock Exchange.

A sample of 131 listed companies for period of 2001-2004 was used to examine this relationship. The result from regression analysis indicated that there was a statistical significance between profitability, measured through gross operating profit, and the cash conversion cycle. From those results, they claimed that the managers could create value for shareholders by handling correctly the cash conversion cycle and keeping each different component to an optimum level.

Raheman and Nasr (2007) have selected a sample of 94 Pakistani firms listed on Karachi Stock Exchange for a period of 6 years from 1999-2004 to study the effect of different variables of working capital management on the net operating profitability. From result of study, they showed that there was a negative relationship between variables of working capital management including the average collection period, inventory turnover in days, average collection period, cash conversion cycle and profitability. Besides, they also indicated that size of the firm, measured by natural logarithm of sales, and profitability had a positive relationship.

Finally, Afza and Nazir (2009) made an attempt in order to investigate the traditional relationship between working capital management policies and a firm’s profitability for a sample of 204 non-financial firms listed on Karachi Stock Exchange (KSE) for the period 1998-2005. The study found significant different among their working capital requirements and financing policies across different industries. Moreover, regression result found a negative relationship between the profitability of firms and degree of aggressiveness of working capital investment and financing policies.

They suggested that managers could crease value if they adopt a conservative approach towards working capital investment and working capital financing policies. 3. Methodology Data Collection We utilize secondary data from listed companies in Vietnam stock market to investigate the relationship between working capital management and profitability. The reason we choose Vietnamese International Research Journal of Finance and Economics – Issue 49 (2010) 62 market because there have not been any research about this relationship in here.

For the purpose of this research, firms in financial sector, banking and finance, insurance, leasing, business service, renting, and other service are excluded from the sample. The most recent period for this investigating is 20062008. Some of the firms are not included in the sample due to lack information for the certain period. The sample is based on financial statements of 130 firms that listed in Vietnam stock market. With 130 firms for period of 2006-2008, we have 390 observations totally. Variables The variables used in this study based on previous researches about the relationship between working capital management and profitability.

Gross operating profitability that is a measure of profitability of firm is used as dependent variable. It is defined as sales minus cost of goods sold, and divided by total assets minus financial assets. For a number of firms in the sample, financial assets, which are chiefly shares in affiliated firms, are a significant part of total assets. When the financial assets are main part of total assets, its operating activities will contribute little to overall return on assets. Hence, that is the reason why return on assets is not considered as a measure of profitability.

Number of days accounts receivable used as proxy for the collection policy is an independent variable. It is calculated as (accounts receivable x 365)/sales. Number of days inventories used as proxy for the inventory policy is an independent variable. It is calculated as (inventories x 365)/ cost of goods sold. Number of days accounts payable used as proxy for the payment policy is an independent variable. It is calculated as (accounts payable x 365)/ cost of goods sold. The cash conversion cycle used as a comprehensive measure of working capital management is another independent variable.

It is calculated as (number of days accounts receivable + number of days inventory – number of days accounts payable). Various studies have utilized the control variables along with the main variables of working capital in order to have an opposite analysis of working capital management on the firm’s profitability (Deloof, 2003; Lazaridis and Tryfonidis, 2006). The logarithm of sales used to measure size of firm is a control variable. In addition, debt ratio used as proxy for leverage, calculated by dividing total debt by total assets, and ratio of fixed financial assets to total assets are also control variable in the regressions.

According to Deloof (2003) fixed financial assets are mainly shares in affiliated firms, intended to contribute to the activities of the firm that holds them, by establishing a lasting and specific relation and loans that were granted with the same purpose. 4. Data Analysis Descriptive Statistics Table 1: Descriptive statistics Maximum 313. 36 313. 91 315. 21 410. 65 30. 67 0. 92 0. 84 3. 86 n Mean Std. deviation Minimum AR 390 51. 91 43. 62 1. 92 AP 390 45. 40 43. 29 1. 74 INV 390 87. 74 64. 62 0. 77 CCC 390 96. 21 81. 15 -121. 7 LOS 390 26. 61 1. 5 23. 22 DR 390 0. 53 0. 57 0. 04 FATA 390 0. 12 0. 15 0. 00 GROSSPR 390 0. 35 0. 41 -0. 43 130 Vietnam non- financial firms, 2006-2008 • Number of days accounts receivable (AR)= Average of accounts receivable / Sales* 365 • Number of days accounts payable (AP)= Average of accounts payable / Cost of goods sold *365 63 • • • • • • International Research Journal of Finance and Economics – Issue 49 (2010) Number of days inventory (INV) = Average of inventory / Cost of goods sold * 365 Cash conversion cycle (CCC) = AR+ INV- AP Natural Logarithm of sales LOS) = ln(sale) Debt ratio (DR)= Total debt/ Total assets Fixed financial assets to total assets (FATA) = Fixed financial assets/ Total assets Gross operating profitability (GROSSPR) = ( Sales – Cost of goods sold)/ (Total assets – Financial assets) Table 1 gives descriptive statistics for 130 Vietnam non financial firms for a period of three years from 2006 to 2008 and for a total 390 firms- year observations. Looking at this table, we can see that the average value of net gross operating profitability is 35. 2% of total assets, and standard deviation is 40. 7%.

This figure means that the value of profitability can deviate from mean to both sides by 40. 7%. The maximum and minimum values of net operating profitability are 3. 86 and -0. 43 respectively. Information from descriptive statistics also indicates that the mean of cash conversion cycle that used as a proxy to check the efficiency in managing working capital is 96days and standard deviation is 81 days. The average of number of days accounts receivable is 52 days with standard deviation 44 days. Minimum time taken by a company to collect cash from customers is 2 days while the maximum time for this goal is 313 days.

The average time of paying to suppliers is 45 days and the standard deviation is 43 days. Maximum time taken from firm to pay for their suppliers is 314 days while minimum time taken for this purpose is 2 days. Moreover, it takes an average 88 days in order to sell inventory with standard deviation of 65 days. Maximum time taken by a firm is 315 days, while minimum time to convert inventory into sales is 1 day. Natural logarithm of sales that measure the size of the firm is used as a control variable. From Table 1 we can see that the mean of logarithm of sales is 26. 61 and standard deviation is 1. 35.

The maximum value of log of sales for a firm in a year is 30. 67 while the minimum value is 23. 22. Debt ratio is used to check the relationship between debt financing and the profitability. It is also used as a control variable. The result of descriptive statistics indicates that the average of debt ratio is 53% with standard deviation of 57%. The maximum debt ratio financing used by a firm is 92% which is unusual because of debt lager asset. However, it is also possible if the equity of the firm is negative. While the minimum of debt ratio is 4%, this means that there is a company that uses a little debt in its operation.

Finally, the fixed financial assets to total assets ratio is used to check the ratio of fixed financial assets to the total assets of Vietnam firms. It is also utilized as a control variable. The mean value for this ratio is 12% with a standard deviation of 15%. The maximum value of financial assets to total assets is 84% and the minimum value for this purpose is nearly 0%. Correlation Analysis Table 2: Correlation matrix CCC LOS DR FATA GROSSPR AR AP INV AR 1. 000 AP . 408** 1. 000 INV . 285** . 235** 1. 000 CCC . 543** -. 115* . 783** LOS -. 279** -. 138** -. 198** ** DR -. 35 . 157 . 043 FATA -. 043 -. 079 -. 119* GROSSPR -. 223** . 195** -. 202** ** Correlation is significant at 0. 01 level (2-tailed). * Correlation is significant at 0. 05 level (2-tailed). 1. 000 -. 234** -. 028 -. 085 -. 383** 1. 000 -. 040 -. 016 . 172** 1. 000 -. 271** . 231** 1. 000 . 075 1. 000 The first, we have started our analysis of correlation results between the average collection period (AR) and operating profitability. The result of correlation analysis shows a negative coefficient International Research Journal of Finance and Economics – Issue 49 (2010) 4 – 0. 223, with p value of 0. 000. It shows that there is a high significant at ? = 1%. This means that if number of days accounts receivable increase, it will make operating profitability decrease. Correlation result between inventory turnover in days (INV) and the operating profitability also indicate the same type of result. The correlation coefficient is – 0. 202 and p value is 0. 000. It also shows a high significant at ? = 1%. It explains for reason why when the firm takes more time in selling inventory, it will adversely affect its profitability.

On the other hand, correlation result between number of days accounts payable (AP) and the gross operating profitability is a positive. The correlations coefficient is 0. 195 and p value is 0. 000. It shows highly significant at ? = 1%. This means that the more profitable firms wait longer to pay their bills. The cash conversion cycle that is used as a comprehensive measure of working capital management also has a negative correlation with the gross operating profitability with coefficient -0. 383 and p value is 0. 000. It also shows highly significant at ? 1%. This demonstrates that paying suppliers longer and collecting payments from customers earlier, and keeping products in stock less time, are all associated with an increase in the firm’s profitability. Result from analysis also shows a positive correlation between natural logarithm of sales that is used to measure the size of firm and the operating profitability. Its coefficient correlation is 0. 172 with p value 0. 001. It shows highly significant at ? = 1%. This shows that as size of the firm increases, it will increase its profitability and vice versa.

To sum, result from analyzing of correlation indicates that there is a negative between cash conversion cycle, number of days accounts receivable, number of days inventories with the profitability of firms are consistent with the research of Deloof (2003) and Raheman and Nasr (2007). However, in their study, they indicated a negative relationship between number of days accounts payable and profitability. Contrast, this research shows a positive relationship between number of days accounts payable and profitability. This analysis suits with result of Lazaridis and Tryfonidis (2006).

Multiple Regression Analysis A shortcoming of Pearson correlations is that they do not allow identifying causes from consequences. Hence, we use regression analysis to investigate the impact of working capital management on corporate profitability. The determinants of corporate profitability are estimated with a fixed effects model. Fixed effects estimated assumes firm specific intercepts, which capture the effects of those variables that particular to each firm and that are constant over time. Model 1: GROSSPRit = ? 0 + ? 1 (ARit) + ? 2 (DRit) + ? 3 (LOSit) + ? 4 (FATAit) + ?

In model 1, we use gross operating profitability (GROSSPR) as a dependent variable. Number of days accounts receivable (AR) is used as an independent variable. While, Debt ratio (DR), Natural logarithm of sales (LOS) and Fixed financial assets to total assets (FATA) are used as control variables. Table 3: Multiple Regression Analysis result (Model 1) Dependent Variables Independent variables AR DR LOS FATA F-value Durbin-Watson R-Sq=13. 5% R-Sq(adj)=12. 6% ? -0. 169 0. 269 0. 138 0. 143 14. 969 1. 863 Gross operating profitability(GROSSPR) t-value Sig. VIF -3. 418 5. 450 2. 76 2. 892 0. 001 0. 000 0. 005 0. 004 0. 000 n = 390 1. 091 1. 086 1. 089 1. 085 Model 1 is estimated with fixed effects and includes number of days accounts receivable as a measure of accounts receivable policy. The result of this regression indicates that the coefficient of account receivable is negative with -0. 169 and p-value is 0. 001. It shows highly significant at ? = 0. 01. 65 International Research Journal of Finance and Economics – Issue 49 (2010) This implies that the increase or decrease in accounts receivable will significantly affect profitability of firm.

Debt ratio is used as a proxy for leverage, from analysis of regression shows that there is a positive relationship with dependent variable. The coefficient is 0. 269 and has significant at ? = 0. 01. This means that if there is an increase in debt ratio it will lead to increase in profitability of firm. The result also indicates that there is a positive relationship among logarithm of sale, fixed financial assets to total assets and profitability. The coefficients are 0. 138 and 0,143 respectively. Both of them are significant at ? = 0. 01. It implies that the size of firm has effect on profitability of firm.

The larger size leads to more profitable. The adjusted R2, also called the coefficient of multiple determinations, is the percent of the variance in the dependent explained uniquely or jointly by the independent variables and is 12. 6%. The F statistic is used to test significant of R. From result of SPSS, we see that the model is fit with Fstatistics 14. 969 and p-value is 0. 000. It shows highly significant at ? = 0. 01. So concludes that at least one of AR, DR, LOS, and FATA is related to GROSSPR. Model 2: GROSSPRit = ? 0 + ? 1 (APit) + ? 2 (DRit) + ? 3 (LOSit) + ? 4 (FATAit) + ?

In the model 2, there are the dependent variable gross operating profit and the same independent variables as the first model 1equation. The only difference is number of days accounts receivable variable replaced by number of days accounts payable variable Table 4: Multiple Regression Analysis result (Model 2) Dependent Variables Independent variables AP DR LOS FATA F-value Durbin-Watson R-Sq=14. 5% R-Sq(adj)=13. 7% ? 0. 197 0. 252 0. 121 0. 162 16. 384 1. 791 Gross operating profitability(GROSSPR) t-value Sig. 4. 090 5. 105 4. 462 3. 313 0. 000 0. 000 0. 000 0. 001 0. 000 VIF 1. 046 1. 102 1. 021 1. 82 n = 390 Looking at coefficients Table 4, we see that there is a positive relationship between number of days accounts payable and profitability of firm. The coefficient is 0. 197 and p value is 0. 000. It shows highly significant at ? = 0. 01. It implies that the increase or decrease in the average payment period significantly affects profitability of the firm. The positive relationship between the average payment period and profitability indicates that the more profitable firms wait longer to pay their bill. The adjusted R2 is 13,7% and we see that F of the model is fit with F-statistics 16. 84 and pvalue is 0. 000. It shows highly significant at ? = 0. 01. Model 3: GROSSPRit = ? 0 + ? 1 (INVit) + ? 2 (DRit) + ? 3 (LOSit) + ? 4 (FATAit) + ? The third model is run using the number of days inventories as an independent variable as substitute of average payment period. The other variables are same as they have been in first and second model. Table 5: Multiple Regression Analysis result (Model 3) Dependent Variables Independent variables INV DR LOS FATA ? -0. 167 0. 280 0. 153 0. 133 Gross operating profitability(GROSSPR) t-value Sig. -3. 436 0. 001 5. 688 0. 000 3. 50 0. 002 2. 688 0. 007 VIF 1. 057 1. 081 1. 045 1. 096 International Research Journal of Finance and Economics – Issue 49 (2010) F-value Durbin-Watson R-Sq=13. 5% R-Sq(adj)=12. 6% 15. 004 1. 829 0. 000 n = 390 66 The result of regression indicates that the relationship between number of days inventories and profitability is negative. The coefficient of this relationship is -0. 167 and significant at ? = 0. 01. This means that if the inventory takes more time to sell, it will adversely affect profitability. The adjusted R2 is 12,6%. The coefficient of F statistic is 15. 04 and has significant at ? = 0. 01. Model 4: GROSSPRit = ? 0 + ? 1 (CCCit) + ? 2 (DRit) + ? 3 (LOSit) + ? 4 (FATAit) + ? In fourth model, cash conversion cycle is used as an independent variable instead of number of days accounts receivable, number of days accounts payable and number of days inventories. The other variables are kept the same as they were in the first three models. Table 6: Multiple Regression Analysis result (Model 4) Gross operating profitability(GROSSPR) t-value Sig. -7. 081 0. 000 5. 196 0. 000 2. 231 0. 026 2. 468 0. 014 25. 724 0. 000 1. 906

Dependent Variables Independent variables CCC DR LOS FATA F-value Durbin-Watson R-Sq=21. 1% R-Sq(adj)=20. 3% ? -0. 333 0. 246 0. 104 0. 117 VIF 1. 078 1. 092 1. 065 1. 092 n= 390 The cash conversion cycle is used popular to measure efficiency of working capital management. From result of regression running indicates that there is a negative relationship between cash conversion cycle and operating profitability. The coefficient is -0. 333 with p-value 0. 000. It is highly significant at ? = 0. 01. This implies that the increase or decrease in the cash conversion cycle significantly affects profitability of the firm.

The adjusted R2 is 20. 3%. The coefficient of F statistic is 25. 724 and has significant at ? = 0. 01. All regression models were tested for multicollinearity. The variance inflation factor (VIF) or the tolerances of the explanatory variables is used to detect whether one predictor has a strong linear association with the remaining predictors. VIF measures how much the variance of an estimated regression coefficient increases if your predictor are correlation (multicollinearity). The largest VIF among all predictors is often used as an indicator of serve muticollinearity.

All predictors had a variance inflation factor ranged between 1and1. 1, except of debt ratio in model 2 with value at 1. 102, which totally indicates that there is absence of multicollinearity between the predictors in the regression models. 5. Conclusions This paper support for existing literatures such as Shin and Soenen (1998), Deloof(2003), Raheman and Nars (2007) and who found a strong negative relationship between the measures of working capital management including the number of days accounts receivable, number of days inventories and cash conversion cycle with corporate profitability.

Moreover, this paper also adds to finding of Lazaridis and Tryfonidis (2006) who claimed that there was a positive relationship between number of days accounts payable and profitability. The negative between corporate profitability that measured by gross operating profitability and cash conversion cycle that used as measuring efficiency of working capital management shows that cash conversion cycle is longer, profitability is smaller. This study suggests that managers can create value for their shareholders by reducing the cash conversion cycle to a reasonable range. 7 International Research Journal of Finance and Economics – Issue 49 (2010) Result from analysis of relationship between working capital management and profitability on Vietnam stock market also indicates that there is a negative between number of days accounts receivable, number of days inventories and profitability. So we claim that managers can increase profitability by reducing the number of days accounts receivable and inventories. Besides, our research also shows that more profitability firms wait longer to pay their bills.

However, the period of time for this study is shortly in compare with some of the previous studies about the relationship between working capital management and profitability (Deloof, 2003, Shin and Soenen, 1998). So, the sample does not highly stand for population. Moreover, the study only refers to internal factors but not consider external factors as industry dummy, level of economic activity (Lazaridis and Tryfonidis, 2006). Future research could further explore in order to overcome these limits. References 1] [2] [3] [4] [5] [6] [7] [8] Afza, T. , & Nazir, M. (2009). Impact of aggressive working capital management policy on firms’ profitability. The IUP Journal of Applied Finance, 15(8), 20-30. Deloof, M. (2003). Does working capital management affect profitability of Belgian firms? Journal of Business Finance & Accounting, 30(3-4), 573-588. Eljelly, A. M. (2004). Liquidity-profitability tradeoff: An Empirical Investigation in an Emerging Market. International Journal of Commerce and Management, 14(2), 48-61. Filbeck, G. , & Krueger, T. 2005). Industry related differences in working capital management. Journal of Business, 20(2), 11-18. Garcia-Teruel, P. J. , & Martinez-Solano, P. (2007). Effects of working capital management on SME profitability. International Journal of Managerial Finance, 3(2), 164-177. Keown, A. J. , Martin, J. D. , Petty, J. W. , & Scott, D. (2003). Foundations of Finance, 4ed: Pearson Education, New Jersey Lamberson, M. (1995). Changes in working capital of small firms in relation to changes in economic activity. Journal of Business, 10(2), 45-50.

Lazaridis, I. , & Tryfonidis, D. (2006). Relationship between working capital management and profitability of listed companies in the Athens stock exchange. Journal of Financial Management and Analysis, 19(1), 26-35 Raheman, A. , & Nasr, M. (2007). Working capital management and profitability-case of Pakistani firms. International Review of Business Research Papers 3(1), 279-300. Shin, H. H. , & Soenen, L. (1998). Efficiency of working capital management and corporate profitability. Financial Practice and Education, 8(2), 37-45.

Singh, J. P. , & Pandey, S. (2008). Impact of working Capital Management in the Profitability of Hindalco Industries Limited. Icfai University Journal of Financial Economics, 6(4), 62-72. Smith. (1980). Profitability versus liquidity tradeoffs in working capital management, in readings on the management of working capital. New York,St. Paul: West Publishing Company. Van Horne, J. C. , & Wachowicz, J. M. (2004). Fundamentals of Financial Management (12 ed. ). New york: Prentice Hall. [9] [10] [11] [12] [13]

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