IDEAS home Printed from https://ideas.repec.org/a/rze/efinan/v9y2014i3p1-10.html
   My bibliography  Save this article

Working Capital Management, Profitability And Risk – Analyse Of Companies Listed On The Warsaw Stock Exchange

Author

Listed:
  • Monika Bolek

    (University of Lodz)

Abstract

This paper presents the problem of working capital management, profitability and risk represented by working capital strategy. According to the theory the more working capital is engaged in the company resulting in higher liquidity the lower the profitability and risk connected to the liquidity. On the other hand we can expect that the lower the working capital level and hence the liquidity the higher the profitability and risk., The author decided to test companies listed on the Warsaw Stock Exchange to see if balance sheet structure and risk connected to working capital strategy were related to the return measured by ROA and ROE in non-financial companies in the period 1997–2007. The results presented below show a lack of correlation between working capital strategies (and the related risk levels) and the returns on assets and equity.

Suggested Citation

  • Monika Bolek, 2014. "Working Capital Management, Profitability And Risk – Analyse Of Companies Listed On The Warsaw Stock Exchange," "e-Finanse", University of Information Technology and Management, Institute of Financial Research and Analysis, vol. 9(3), pages 1-10, January.
    • Handle: RePEc:rze:efinan:v:9:y:2014:i:3:p:1-10
    as

    Download full text from publisher

    File URL: http://e-finanse.com/artykuly_eng/251.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Katerina Lyroudi & Dan McCarty, 1993. "An Empirical Investigation of the Cash Conversion Cycle of Small Business Firms," Journal of Entrepreneurial Finance, Pepperdine University, Graziadio School of Business and Management, vol. 2(2), pages 139-161, Spring.
    2. Gupta, Mc & Huefner, Rj, 1972. "Cluster Analysis Study Of Financial Ratios And Industry Characteristics," Journal of Accounting Research, Wiley Blackwell, vol. 10(1), pages 77-95.
    3. Morris Lamberson, 1995. "Changes in Working Capital of Small Firms in Relation to Changes in Economic Activity," American Journal of Business, Emerald Group Publishing, vol. 10(2), pages 45-50.
    4. Pedro Juan García‐Teruel & Pedro Martínez‐Solano, 2007. "Effects of working capital management on SME profitability," International Journal of Managerial Finance, Emerald Group Publishing Limited, vol. 3(2), pages 164-177, April.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Julia Koralun-Bereźnicka, 2014. "On the Relative Importance of Corporate Working Capital Determinants: Findings from the EU Countries," Contemporary Economics, University of Economics and Human Sciences in Warsaw., vol. 8(4), December.
    2. Abdul Basyith & Abid Djazuli & Fitriya Fauzi, 2021. "Does Working Capital Management Affect Profitability? Empirical Evidence from Indonesia Listed Firms," Asian Economic and Financial Review, Asian Economic and Social Society, vol. 11(3), pages 236-251, March.
    3. Julia Koralun-Bereźnicka, 2011. "Country and industry factors as determinants of corporate financial liquidity in the European Union countries," Bank i Kredyt, Narodowy Bank Polski, vol. 42(1), pages 19-48.
    4. Talat Afza, 2011. "Working Capital Management Efficiency of Cement Sector of Pakistan," Journal of Economics and Behavioral Studies, AMH International, vol. 2(5), pages 223-235.
    5. Dr. Muhammad Mahmood Shah Khan & Dr. Quratulain Zafar & Najeeb Nasir, 2023. "Impact of Working Capital on Corporate Performance in Seasonal and Non-Seasonal Industries: Evidence from Pakistan," Journal of Policy Research (JPR), Research Foundation for Humanity (RFH), vol. 9(2), pages 627-635.
    6. Obaid Ur Rehman, 2017. "Firms' Aggressiveness and Respective Performance: An Empirical Study under Pakistani Scenery," International Journal of Entrepreneurial Knowledge, Center for International Scientific Research of VSO and VSPP, vol. 5(1), pages 5-19, June.
    7. Hassan, M. Kabir & Aysan, Ahmet Faruk & Kayani, Umar Nawaz & Choudhury, Tonmoy, 2023. "Working capital as a firm performance savior? Evidence from Scandinavian countries," Research in International Business and Finance, Elsevier, vol. 65(C).
    8. de Almeida, Juliano Ribeiro & Eid, William, 2014. "Access to finance, working capital management and company value: Evidences from Brazilian companies listed on BM&FBOVESPA," Journal of Business Research, Elsevier, vol. 67(5), pages 924-934.
    9. Nida Shah, 2016. "The Impact of Working Capital Management on Firms Profitability in Different Business Cycles: Evidence from Pakistan," Journal of Finance and Economics Research, Geist Science, Iqra University, Faculty of Business Administration, vol. 1(1), pages 58-70, March.
    10. Chauhan, Gaurav Singh, 2019. "Are working capital decisions truly short-term in nature?," Journal of Business Research, Elsevier, vol. 99(C), pages 238-253.
    11. Woei-Chyuan Wong & Sharmilawati Sabki & Angappan Regupathi & Syed Mohd. Na’im Syed Salim, 2019. "Malaysian SMEs’ Liability Structure and Its Impact on Profitability and Growth," Asian Academy of Management Journal of Accounting and Finance (AAMJAF), Penerbit Universiti Sains Malaysia, vol. 15(2), pages 77-94.
    12. Tarek Ibrahim Eldomiaty & Mohamed Hashem Rashwan & Mohamed Bahaa El Din & Waleed Tayel, 2016. "Firm, industry and economic determinants of working capital at risk," International Journal of Financial Engineering (IJFE), World Scientific Publishing Co. Pte. Ltd., vol. 3(04), pages 1-29, December.
    13. Samson Mbano & Ongayi Wadesango & Newman Wadesango, 2022. "Effectiveness of Credit Management Policies as a Treasury Management Tool in Enhancing Financial Performance: The Case of Colcom Pvt Ltd. 2015-2019," International Journal of Economics and Financial Issues, Econjournals, vol. 12(5), pages 64-70, September.
    14. Eunhye (Olivia) Park & Woo-Hyuk Kim, 2021. "The effect of inventory turnover on financial performance in the US restaurant industry: The moderating role of exposure to commodity price risk," Tourism Economics, , vol. 27(7), pages 1417-1429, November.
    15. repec:hum:wpaper:sfb649dp2005-062 is not listed on IDEAS
    16. Muhammad Iqbal & Faisal Javed, 2017. "The Moderating Role of Corporate Governance on the Relationship between Capital Structure and Financial Performance: Evidence from Manufacturing Sector of Pakistan," International Journal of Research in Business and Social Science (2147-4478), Center for the Strategic Studies in Business and Finance, vol. 6(1), pages 89-105, January.
    17. Hakan Özkaya & Şebnem Yaşar, 2023. "Working capital management in the food and beverage industry: Evidence from listed European companies," Agricultural Economics, Czech Academy of Agricultural Sciences, vol. 69(2), pages 78-88.
    18. Fernando García & Francisco Guijarro & Ismael Moya, 2013. "Monitoring credit risk in the social economy sector by means of a binary goal programming model," Service Business, Springer;Pan-Pacific Business Association, vol. 7(3), pages 483-495, September.
    19. Shahid Ali, 2011. "Working Capital Management and the Profitability of the Manufacturing Sector: A Case Study of Pakistan’s Textile Industry," Lahore Journal of Economics, Department of Economics, The Lahore School of Economics, vol. 16(2), pages 141-178, Jul-Dec.
    20. Abdul-Rahman Khokhar, 2019. "Working Capital Investment: A Comparative Study - Canada Versus the United States," Multinational Finance Journal, Multinational Finance Journal, vol. 23(1-2), pages 65-102, March - J.
    21. Paweł Mielcarz & Dmytro Osiichuk & Paweł Wnuczak, 2018. "Working Capital Management through the Business Cycle: Evidence from the Corporate Sector in Poland," Contemporary Economics, University of Economics and Human Sciences in Warsaw., vol. 12(2), June.

    More about this item

    Keywords

    working capital; profitability; risk Least Squares Method;
    All these keywords.

    JEL classification:

    • G31 - Financial Economics - - Corporate Finance and Governance - - - Capital Budgeting; Fixed Investment and Inventory Studies
    • M21 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Economics - - - Business Economics

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:rze:efinan:v:9:y:2014:i:3:p:1-10. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Pawel Bochenek (email available below). General contact details of provider: https://edirc.repec.org/data/igwsipl.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.