Impact of Working Capital Management on Profitability and Market Evaluation: Evidence from Tehran Stock Exchange

The main objective of this study is providing empirical evidence about the impact of working capital management on profitability and Market evaluation of the companies listed in Tehran Stock Exchange. For this purpose, we studied a sample of companies listed in Tehran Stock Exchange during the years 2006 to 2010. And from these companies we collected 400 years-company as data and analyzed them. In this study we use variables of return on assets ratio and return on invested capital ratio to measure the profitability of companies, variable of Tobin Q ratio to measure the market value of companies and variables of cash conversion cycle, current ratio, current assets to total assets ratio, current liabilities to total assets ratio and total debt to total assets ratio as working capital management Criteria. The results of the research indicate that there is a significant relationship between the working capital management and profitability criteria of company but there is no significant relationship with the criterion of market value of company. Also the results of research show that management can increase the profitability of company through reducing cash conversion cycle and total debts to total assets ratio.