Impact of working capital management on profitability of Macedonian industrial companies

Abstract

Efficient and effective working capital management is crucial given its impact on the company's profitability. The focus of the research in this paper is the impact of individual components of working capital on the profitability of industrial companies. The research was conducted on a sample of industrial companies listed on the Macedonian Stock Exchange using their accounting data for a period covering ten years 2010 - 2019 by applying a panel regression analysis. We found that corporate profitability increases with increasing account receivable period, account payables payment period, company size, sales growth, and volatility in net operating profit. Additionally, profitability increases with decreasing in the cash conversion cycle and financial leverage. Inventories conversion period and fixed financial assets do not show a statistically significant relationship with the company profitability.