Impact of Working Capital Management on Company's Profitability

Abstract

In an extension of the study on the relationship between working capital and profitability, this study empirically investigates the relationship between the firm's efficiency of liquidity management and its profitability. Efficient liquidity management is the forming component of the overall corporate strategy to create value for shareholders. Liquidity and profitability of the firm is significantly affected by the ways in which working capital is managed. In other vwrds if we focus on the maximization of liquidity It will lead to reduce the potential profitability of the company. Working capital measures how much in liquid assets a company has available to build its business. We include different articles base on relationship between liquidity and the profitability. On the basis of these articles we have found variables that used in our analysis. We also take three hypotheses to prove the relationship between them. In the analysis portion we take financial data of fourteen companies with four years. Use of regression and correlation by software SPSS for analysis of financial data