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The Impact of Company Characteristics on Working Capital Management

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  • Hashem Valipour
  • Javad Moradi
  • Fatemeh Dehghan Farsi

Abstract

This research studies the effect of company characteristics on the working capital management. The company characteristics include profitability, operating cash flow, company size, sale growth, current ratio, quick ratio and debt ratio. The sample consists of 83 firms listed in Tehran Stock Exchange for the period of 2001 to 2010. This study is based on a correlation approach and multiple regressions and Pearson’s correlation were employed to test the hypothesis. Testing the hypothesis was conducted in two stages: in this first stage the relationship between the company characteristics with cash conversion cycle were assessed in all companies and the result indicated that profitability, operating cash flow, company size, sale growth and debt ratio affect the company’s working capital management. In the second stage, the companies were divided into 3 categories: great, average and small. Then the relationship between company characteristics with cash conversion cycle was assessed separately. The results indicated that the effective factors in great levels were profitability, operating cash flow, debt ratio and sale growth, in the average level, the effective factors were profitability, company size, sale growth and debt ratio, and small levels were affected by profitability, sale growth, current ratio, quick ratio and debt ratio.

Suggested Citation

  • Hashem Valipour & Javad Moradi & Fatemeh Dehghan Farsi, 2012. "The Impact of Company Characteristics on Working Capital Management," Journal of Applied Finance & Banking, SCIENPRESS Ltd, vol. 2(1), pages 1-5.
    • Handle: RePEc:spt:apfiba:v:2:y:2012:i:1:f:2_1_5
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    Cited by:

    1. Anton, Sorin Gabriel & Nucu, Anca Elena Afloarei, 2022. "On the role of institutional factors in shaping working capital management policies: Empirical evidence from European listed firms," Economic Systems, Elsevier, vol. 46(2).
    2. Lingesiya Kengatharan & W. S. Sanoli Tissera, 2019. "Do Corporate Governance Practices Influence Working Capital Management Efficiency? Evidence From Listed Manufacturing Companies in Sri Lanka," Research in World Economy, Research in World Economy, Sciedu Press, vol. 10(3), pages 205-216, December.
    3. THAPPA, Sankar, 2015. "Working Capital Management In Indian Oil & Gas Industry - A Case Study Of Reliance Industries Ltd," Academica Science Journal, Economica Series, Dimitrie Cantemir University, Faculty of Economical Science, vol. 1(5), pages 34-44, June.
    4. Dina Korent, 2021. "Target adjustment model and new working capital management performance measure: Evidence from Croatia," Zbornik radova Ekonomskog fakulteta u Rijeci/Proceedings of Rijeka Faculty of Economics, University of Rijeka, Faculty of Economics and Business, vol. 39(1), pages 135-162.

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