The Effect of Working Capital Management on Firm Performance Applied study on Egyptian stock market
DOI:
https://doi.org/10.56830/WRBA11202101Keywords:
Working Capital Management, Receivables Management, Inventory Management, Cash Management, Firm Performance and profitabilityAbstract
The primary purpose of working capital management is to enable the company to maintain sufficient cash flow to meet its short-term operating costs and short-term debt obligations. This is achieved by the effective management of accounts payable, accounts receivable, inventory and cash. The major aim of this study is to examine the effect of working capital management which will be measured by the efficiency of cash management, efficiency of receivables management, and efficiency of inventory management, on firm’s performance that will be measured using the growth in total assets, growth in total sales, as well as the growth in net profit. The data was collected from 6 companies that were listed in the Egyptian stock exchange market from year 2016 to 2020. The analysis of this study was done using (EViews 12) for both descriptive statistics and multiple regressions. The study found that there is a negative correlation between the efficiency of receivables management and the inventory management. While the results of this study indicated that there is an overall positive correlation between working capital management and firm’s financial performance at the 5% level with a probability of 0.0000.
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