THE EFFECT OF WORKING CAPITAL MANAGEMENT ON SMEs PROFITABILITY IN MALAYSIA
Journal Title: Polish Journal of Management Studies - Year 2017, Vol 16, Issue 2
Abstract
The paper examines the effects of working capital management on Malaysian SMEs profitability within the sight of control factors measured by the size of the firm, leverage, and sales growth. Secondary data was drowned from Companies Commission of Malaysia, database for 66 SMEs in Malaysia for the period between 2006-2012. Panel data regressions were applied in the analysis. Empirical results established a negative effect of working capital administration measures: Stock Turnover in Days, Days Account Receivables, and Cash Conversion Cycle on SMEs benefit intermediaries, Return on Equity (ROE) and Return on Assets The results also established a positive effect of Net Operating Profit on Cash Conversion Cycle. Furthermore, the study also revealed a positive effect of Days Account Payables on SME’s Return of Asset and Return of Equity, yet having a negative effect on Net operating Profit. The findings imply that profitability of Malaysian SMEs relies upon effective working capital management. The results imply that Profitability of Malaysian SMEs depends upon effective working capital management. The paper contributes empirical evidence on the effect of working capital on Malaysian SMEs.<br/><br/>
Authors and Affiliations
Abdullahi Hassan Gorondutse, Ahmed Abubakar, Rahima Abass Ali, Muhammad Nura Ibrahim Naalah
Keywords
Related Articles
- EP ID EP248675
- DOI 10.17512/pjms.2017.16.2.09
- Views 84
- Downloads 0
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