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The Impact of Working Capital Management on Firm’s Profitability: Evidence from Malaysian Listed Manufacturing Firms

Year 2017, Volume: 7 Issue: 3, 662 - 670, 01.09.2017

Abstract

This study investigates the relationship between working capital management and firm’s profitability of Malaysian listed manufacturing firms. It aims to examine the impact of working capital management from the aspects of aggressive working capital policy and efficiency of working capital management. Data is obtained from the annual reports of 122 firms listed in the industrial products sector of Bursa Malaysia main board for the six year period from 2007 to 2012 to determine the relationships between the variables of working capital management and firm’s gross operating income. The results indicate that gross operating income is negatively related to the degree of aggressiveness of investment policies but positively related with the degree of aggressiveness of financing policies. Moreover, as a comprehensive measure of the efficiency of working capital management, the study finds cash conversion cycle is positively related to gross operating income. It shows that an increase in inventory conversion period is positively related to firms’ profitability. Likewise, firms can increase profitability by reducing the period of collecting account receivables.

Year 2017, Volume: 7 Issue: 3, 662 - 670, 01.09.2017

Abstract

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Details

Other ID JA95AG85VP
Journal Section Research Article
Authors

Sin-huei Ng This is me

Chen Ye This is me

Tze San Ong This is me

Boon Heng Teh This is me

Publication Date September 1, 2017
Published in Issue Year 2017 Volume: 7 Issue: 3

Cite

APA Ng, S.-h., Ye, C., Ong, T. S., Teh, B. H. (2017). The Impact of Working Capital Management on Firm’s Profitability: Evidence from Malaysian Listed Manufacturing Firms. International Journal of Economics and Financial Issues, 7(3), 662-670.
AMA Ng Sh, Ye C, Ong TS, Teh BH. The Impact of Working Capital Management on Firm’s Profitability: Evidence from Malaysian Listed Manufacturing Firms. IJEFI. September 2017;7(3):662-670.
Chicago Ng, Sin-huei, Chen Ye, Tze San Ong, and Boon Heng Teh. “The Impact of Working Capital Management on Firm’s Profitability: Evidence from Malaysian Listed Manufacturing Firms”. International Journal of Economics and Financial Issues 7, no. 3 (September 2017): 662-70.
EndNote Ng S-h, Ye C, Ong TS, Teh BH (September 1, 2017) The Impact of Working Capital Management on Firm’s Profitability: Evidence from Malaysian Listed Manufacturing Firms. International Journal of Economics and Financial Issues 7 3 662–670.
IEEE S.-h. Ng, C. Ye, T. S. Ong, and B. H. Teh, “The Impact of Working Capital Management on Firm’s Profitability: Evidence from Malaysian Listed Manufacturing Firms”, IJEFI, vol. 7, no. 3, pp. 662–670, 2017.
ISNAD Ng, Sin-huei et al. “The Impact of Working Capital Management on Firm’s Profitability: Evidence from Malaysian Listed Manufacturing Firms”. International Journal of Economics and Financial Issues 7/3 (September 2017), 662-670.
JAMA Ng S-h, Ye C, Ong TS, Teh BH. The Impact of Working Capital Management on Firm’s Profitability: Evidence from Malaysian Listed Manufacturing Firms. IJEFI. 2017;7:662–670.
MLA Ng, Sin-huei et al. “The Impact of Working Capital Management on Firm’s Profitability: Evidence from Malaysian Listed Manufacturing Firms”. International Journal of Economics and Financial Issues, vol. 7, no. 3, 2017, pp. 662-70.
Vancouver Ng S-h, Ye C, Ong TS, Teh BH. The Impact of Working Capital Management on Firm’s Profitability: Evidence from Malaysian Listed Manufacturing Firms. IJEFI. 2017;7(3):662-70.