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Impact of Working Capital Components Management on Profitability and Market Valuation of Tehran Stock Exchange Companies (in Persian)

Author

Listed:
  • Rasaeiyan, Amir

    (, Tax Organization)

  • Akbari, Mir Askar

    (Babol Azad University)

  • Ahmadi, Mina

    (, Sari Payam-Noor University)

  • Soltan Toye, Mohadese

    (Firuzkooh Azad University)

Abstract

Complete design and development of the working capital management can have effective role in company profitability and value creation in the market. The purpose of this study is empirical investigating on working capital management effect on profitability and market valuation of Iranian companies. The 90 sample of firms is drawn from the population of Iranian non-financial firms listed on the Tehran Stock Exchange during 2006-2011. In this study, we used the variables "return on total assets and return on invested capital" as a measure of corporate profitability and Tobinchr('39')s Q as the market valuation variable and variables such as the cash conversion cycle, the ratio of current assets to current liabilities ratio, the current assets to total assets ratio, the current debt to total assets ratio and debt to total assets is used as a measure of working capital management. The results indicate that there is a negative and significant relationship between market valuation and cash conversation cycle. There is a positive and significant relationship between the current assets to current liabilities ratio and market valuation.

Suggested Citation

  • Rasaeiyan, Amir & Akbari, Mir Askar & Ahmadi, Mina & Soltan Toye, Mohadese, 2013. "Impact of Working Capital Components Management on Profitability and Market Valuation of Tehran Stock Exchange Companies (in Persian)," Journal of Monetary and Banking Research (فصلنامه پژوهش‌های پولی-بانکی), Monetary and Banking Research Institute, Central Bank of the Islamic Republic of Iran, vol. 6(17), pages 133-146, December.
    • Handle: RePEc:mbr:jmbres:v:6:y:2013:i:17:p:133-146
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