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Impact of Working Capital Management on Financial Performance: The case of Vietnam

Author

Listed:
  • Hoang-Lan Le
  • Kieu-Trang Vu
  • Thi-Bich-Ngoc Le
  • Ngoc-Khanh Du
  • Manh Dung Tran

Abstract

The research investigates the impact of working capital management on financial performance by using the data collected from listed firms on Ho Chi Minh Stock Exchange (HOSE). The sample is comprised of 69 public firms over the period of 3 years from 2014 to 2016. Using the variable Cash Conversion Cycle (CCC) as measurement for Working Capital Management, the research also takes the following variables in to consideration: “Growth, Cash flow, Liquidity, Risk, and Leverage” which are proven to have impacts on firm performance besides working capital management. Regarding the measurements of financial performance, the variables comprise of Return on Assets (ROA), Return on Equity (ROE), and Return on Sales (ROS). The results imply that Working Capital Management positively impacts the financial performance of firms in the sample. Thus, our study gives a new insight to managers on how to improve the financial performance with working capital management.

Suggested Citation

  • Hoang-Lan Le & Kieu-Trang Vu & Thi-Bich-Ngoc Le & Ngoc-Khanh Du & Manh Dung Tran, 2018. "Impact of Working Capital Management on Financial Performance: The case of Vietnam," International Journal of Applied Economics, Finance and Accounting, Online Academic Press, vol. 3(1), pages 15-20.
    • Handle: RePEc:oap:ijaefa:v:3:y:2018:i:1:p:15-20:id:19
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    Citations

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    Cited by:

    1. Shrikant Krupasindhu Panigrahi & Maryam Juma Al Farsi & Sumathi Kumaraswamy & Muhammad Waris Ali Khan & Faisal Rana, 2022. "Working Capital Management and Shareholder’s Wealth Creation: Evidence from Manufacturing Companies Listed in Oman," IJFS, MDPI, vol. 10(4), pages 1-16, September.
    2. Han Wang & Geng Peng & Benfu Lv, 2018. "Effect of Retail Investor Attention on Chinas A-Share Market Under a Strengthening Financial Regulatory Policy," Asian Economic and Financial Review, Asian Economic and Social Society, vol. 8(10), pages 1274-1297, October.
    3. Mazurina Mohd Ali & Nur Shazwani Ab Hamid & Erlane K Ghani, 2019. "Examining the Relationship Between Enterprise Risk Management and Firm Performance in Malaysia," International Journal of Financial Research, International Journal of Financial Research, Sciedu Press, vol. 10(3), pages 239-251, May.
    4. Onyemenam, Chinedu Micheal & Okwo, Mary Ifeoma & Eze, Charles Uzodinma, 2023. "Free Cash Flow Activities and Financial Performance of Listed Pharmaceutical Firms in Nigeria," International Journal of Research and Scientific Innovation, International Journal of Research and Scientific Innovation (IJRSI), vol. 10(9), pages 109-121, September.
    5. Deari Fitim & Palomba Giulio, 2024. "Does the Cash Conversion Cycle Affect Firm Profitability? Some Empirical Evidence from Listed Firms in North Macedonia," Zagreb International Review of Economics and Business, Sciendo, vol. 27(1), pages 63-77.
    6. Asif Iqbal & Maqsood Hayat, 2020. "Supplier Firm and Customer Firm Relationship on the Performance of Working Capital Management," International Journal of Finance, Insurance and Risk Management, International Journal of Finance, Insurance and Risk Management, vol. 10(3), pages 53-65.

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