Influence of Working Capital Management on Firms Performance: Fast Food Industry

Abstract

Efficient working capital management is considered vital for the fast food industry in these times of economic uncertainty. Cash conversion cycle is an all-important formula that can measure the efficiency of working capital management of a firm. This study investigated the influence of working capital management on firms performance in fast food industry. For this research past 10 year data was collected from 8 of the biggest fast food chains in the world. Firm performance was represented by dependent variables including Return on Assets, Return on Equity and Net Profit. To discover how the variables were linked to each other collected data was tested through descriptive analysis, correlation analysis and regression analysis by EViews software. The findings indicated that cash conversion cycle has a negative relationship with all three dependent variables. Through the results we can deduce that cash conversion cycle will not affect the firm performance in any significant way. Consequently, while creating working capital management strategies for the fast food industry the influence on firm performance should be considered. It is also recommended to understand the influence of working capital management even better future researchers should select firms from a broader pool or a certain country since they operate in different conditions.