Working Capital Management and Firm Profitability. Empirical Evidence for the Romanian Industry
The paper aims on empirically testing the connection between a firm's liquidity, or else a firm's ability to manage short-term liabilities, without undue stress and its profitability. We are using both a static and dynamic measure of firm liquidity: the traditional current liquidity ratio...
| Main Authors: | , |
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| Format: | Article |
| Language: | English |
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Ovidius University Press
2017-01-01
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| Series: | Ovidius University Annals: Economic Sciences Series |
| Subjects: | |
| Online Access: | http://stec.univ-ovidius.ro/html/anale/RO/2017-2/Section%20IV/14.pdf |
| Summary: | The paper aims on empirically testing the connection between a firm's liquidity, or else a firm's ability to manage short-term liabilities, without undue stress and its profitability. We are using both a static and dynamic measure of firm liquidity: the traditional current liquidity ratio alongside one of the most frequent used working capital management indicator, the cash conversion cycle. An empirical analysis is performed based on 50 listed companies from Bucharest Stock Exchange, covering various industries. The empirical results are confirming the previous research that has confirmed the negative connection between the days sales outstanding (DSO), respectively the days inventory outstanding (DIO) and the profitability of the firm, while cash conversion cycle seems to be positively connected with the firm profitability, in contradiction with some of the previous empirical literature. |
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| ISSN: | 2393-3127 2393-3127 |