ScholarLens Back to search
2012•Unisa Institutional Repository (University of South Africa)Requires access

The Relationship between Working Capital Management and Profitability of Listed Companies on the Johannesburg Stock Exchange

Sam Ngwenya

Open publisher page 1 citations

Abstract

Efficient working capital management is an integral component of the overall corporate strategy to create shareholders’ wealth. This paper seeks to extend findings regarding the relationship between working capital management and profitability. A sample of 69 companies listed on the Johannesburg Stock Exchange (JSE) for the period from 1998 to 2008 was selected. The results revealed a statistically significant negative relationship among profitability (as measured through gross operating profit), the cash conversion cycle (CCC), and number of days accounts receivable (AR). The results also revealed a positive and significant relationship among profitability, the number of days accounts payable (AP), and the number of days inventory (INV). The results suggested that \nmanagers could increase their company’s profitability by effectively managing the CCC and its components.

About this research paper

What this paper is about

Efficient working capital management is an integral component of the overall corporate strategy to create shareholders’ wealth. This paper seeks to extend findings regarding the relationship between working capital management and profitability. A sample of 69 companies listed on the Johannesburg Stock Exchange (JSE) for the period from 1998 to 2008 was selected. The results revealed a statistically significant negative relationship among profitability (as measured through gross operating profit), the cash conversion cycle (CCC), and number of days accounts receivable (AR). The results also revealed a positive and significant relationship among profitability, the number of days accounts payable (AP), and the number of days inventory (INV). The results suggested that \nmanagers could increase their company’s profitability by effectively managing the CCC and its components.

Why it matters

OpenAlex reports 1 citations for this work. Citation counts describe recorded attention and do not establish research quality.

Key contribution

A contribution statement is not available in the OpenAlex record.

Method / approach

Method details are not available in the OpenAlex metadata.

Main findings

Findings are not separately available in the OpenAlex metadata.

Limitations

Limitations are not available in the OpenAlex metadata.

Applications

Application details are not available in the OpenAlex metadata.

Available abstract

Efficient working capital management is an integral component of the overall corporate strategy to create shareholders’ wealth. This paper seeks to extend findings regarding the relationship between working capital management and profitability. A sample of 69 companies listed on the Johannesburg Stock Exchange (JSE) for the period from 1998 to 2008 was selected. The results revealed a statistically significant negative relationship among profitability (as measured through gross operating profit), the cash conversion cycle (CCC), and number of days accounts receivable (AR). The results also revealed a positive and significant relationship among profitability, the number of days accounts payable (AP), and the number of days inventory (INV). The results suggested that \nmanagers could increase their company’s profitability by effectively managing the CCC and its components.

Key concepts: Stock exchange, Business, Working capital, Profitability index, Finance, Stock (firearms), Accounting, Geography

Related papers

Related paper 1Related paper 2Related paper 3
Back to paper searchBrowse research topicsOriginal source
The Relationship between Working Capital Management and Profitability of Listed Companies on the Johannesburg Stock Exchange — Research Paper | ScholarLens