How the working capital management influences companies' profitability: case study of Greek pharmaceutical companies. (15th August 2019)

• Record Type: Journal Article
• Authors: Axiotis, Dimitris; Hyz, Alina; Kalantonis, Petros
• Is Part Of: International journal of entrepreneurship and small business. Volume 37:Number 4(2019)
• Page Start: 530
• Page End: 544
• Publication Date: 2019-08-15
• Subjects: working capital -- profitability -- crisis -- Greece -- pharmaceutical industry; Entrepreneurship -- Periodicals; Small business -- Management -- Periodicals; 658.42105
• Languages: English
• ISSNs: 1476-1297

Abstract

This study examines the relationship between working capital management and firm's profitability for the period before and after last economic crisis in Greece. We use as a sample Greek pharmaceutical industry. We examine as a dependent variable return on assets ratio, as explanatory variables: cash conversion cycle, days inventory outstanding, days sales outstanding and days payables outstanding and as control variables: firm's growth, leverage and firm's size. The results, based on the implementation of descriptive statistics, Pearson's correlation and regression analysis show: 1) positive relationship between profitability and cash conversion cycle, firm's size, growth and leverage; 2) negative relationship between profitability and components of cash conversion cycle. The impact of economic crisis on these relationships is also analysed.