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Working Capital Management Practices and Profitability of AIM Listed SMEs

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  • Godfred Adjapong Afrifa

    (Department of Accounting and Finance and The Business School, Canterbury Christ Church University, Kent, UK)

Abstract

This paper reports the results of an investigation of the effect of Working Capital Management (WCM) practices on profitability of Small and Medium Enterprises (SMEs) listed on the Alternative Investment Market (AIM), from the perspective of financial directors. Specifically, I look at their WCM target level practices, WCM alteration frequency and WCM strategy practices. The analyses are based on questionnaire distributed to 248 AIM listed SMEs. The paper employs OLS regression on responses from 72 managers of AIM listed SMEs. The results show that the WCM practices of AIM listed SMEs managers have an effect on profitability. However, the results show that given the limited resources of SMEs, the main focus of managers should be on the setting of specific target level for WCM so as to increase profitability.

Suggested Citation

  • Godfred Adjapong Afrifa, 2015. "Working Capital Management Practices and Profitability of AIM Listed SMEs," Journal of Enterprising Culture (JEC), World Scientific Publishing Co. Pte. Ltd., vol. 23(01), pages 1-23.
    • Handle: RePEc:wsi:jecxxx:v:23:y:2015:i:01:n:s0218495815500016
    DOI: 10.1142/S0218495815500016
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    References listed on IDEAS

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    1. Haitham Nobanee & Modar Abdullatif & Maryam AlHajjar, 2011. "Cash conversion cycle and firm's performance of Japanese firms," Asian Review of Accounting, Emerald Group Publishing Limited, vol. 19(2), pages 147-156, July.
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    Cited by:

    1. Nasser A. Alsulayhim, 2019. "The Relationship between Working Capital Management and Profitability," International Business Research, Canadian Center of Science and Education, vol. 12(8), pages 142-152, August.
    2. Xhelil Bekteshi & Sevdie Alshiqi & Arbana Sahiti Ramushi, 2021. "The Impact Of Corporate Social Responsibility And Working Capital Management On Smes Performance During A Pandemic," Baltic Journal of Economic Studies, Publishing house "Baltija Publishing", vol. 7(5).

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