Working capital management and firm profitability

Thorsten Knauer () and Arnt Wöhrmann ()

Metrika: International Journal for Theoretical and Applied Statistics, 2013, vol. 24, issue 1, 77-87

Abstract: Managing a firm’s current assets and liabilities (working capital management) is highly relevant to the success of that firm. While the short-term liquidity effects of working capital management are straightforward to derive, it is an empirical question how it affects firm profitability. This short survey paper consolidates the empirical literature on the association between working capital management and firm profitability. This state of the art analysis provides evidence of positive effects of accounts receivable management and inventory management on profitability. However, results for the effects of accounts payable management on profitability are driven by reverse causality. Finally, this paper highlights critical aspects of prior research and points to avenues for future research. Copyright Springer-Verlag Berlin Heidelberg 2013

Keywords: Management accounting; Working capital management; Cash conversion cycle; Profitability; M10; G30; G32 (search for similar items in EconPapers)
Date: 2013
References: Add references at CitEc
Citations: View citations in EconPapers (23)

Downloads: (external link)
http://hdl.handle.net/10.1007/s00187-013-0173-3 (text/html)
Access to full text is restricted to subscribers.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:spr:metrik:v:24:y:2013:i:1:p:77-87

Ordering information: This journal article can be ordered from
http://www.springer.com/statistics/journal/184/PS2

DOI: 10.1007/s00187-013-0173-3

Access Statistics for this article

Metrika: International Journal for Theoretical and Applied Statistics is currently edited by U. Kamps and Norbert Henze

More articles in Metrika: International Journal for Theoretical and Applied Statistics from Springer
Bibliographic data for series maintained by Sonal Shukla () and Springer Nature Abstracting and Indexing ().