IDEAS home Printed from https://ideas.repec.org/a/taf/oaefxx/v9y2021i1p1954318.html
   My bibliography  Save this article

Working capital management and firm’s profitability: Evidence from Czech certified firms from the EFQM excellence model

Author

Listed:
  • Muhammad Yousaf
  • Petr Bris
  • Ismat Haider
  • David McMillan

Abstract

Working capital management (WCM) is one of the most important decisions for all firms. The main components of WCM are days sales outstanding (DSO), days inventory outstanding (DIO), days payable outstanding (DPO), and cash conversion cycle (CCC). Using a sample of 332 Czech firms, including 20 certified firms from the EFQM (European Foundation for Quality Management) Model, the current study explored the effects of the main components of WCM on firms’ profitability. We used two different regression models to test the hypothesis, i.e. pooled regression and maximum likelihood estimation (MLE). The findings of the research revealed all the components of WCM have a negative impact on firm profitability. On the other hand, the interaction terms of the EFQM certified firms with the components of WCM showed a positive impact on firms’ profitability which means that there is a positive relationship between the components of WCM of the certified firms and profitability. However, it is examined that the quality certificate/award from EFQM Excellence Model decreases the firm’s profitability. The outcomes of the current research will be beneficial to academics, managers, leaders, and directors of the firms to improve their firm’s profitability.

Suggested Citation

  • Muhammad Yousaf & Petr Bris & Ismat Haider & David McMillan, 2021. "Working capital management and firm’s profitability: Evidence from Czech certified firms from the EFQM excellence model," Cogent Economics & Finance, Taylor & Francis Journals, vol. 9(1), pages 1954318-195, January.
    • Handle: RePEc:taf:oaefxx:v:9:y:2021:i:1:p:1954318
    DOI: 10.1080/23322039.2021.1954318
    as

    Download full text from publisher

    File URL: http://hdl.handle.net/10.1080/23322039.2021.1954318
    Download Restriction: Access to full text is restricted to subscribers.
    File URL: https://libkey.io/10.1080/23322039.2021.1954318?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Ardi Ahmeti & Yllka Ahmeti & Skender Ahmeti, 2022. "The impact of working capital management on SME profitability – evidence from Kosovo," Zbornik radova Ekonomskog fakulteta u Rijeci/Proceedings of Rijeka Faculty of Economics, University of Rijeka, Faculty of Economics and Business, vol. 40(2), pages 459-478.
    2. Swastika GAYEN & Jaybhushan MAHALLE & Vishwajit HARISH & Taniya MALIK, 2023. "Beyond the Balance Sheet: Dissecting the Impact of WCM on Profitability in India’s Business Arena," CECCAR Business Review, Body of Expert and Licensed Accountants of Romania (CECCAR), vol. 4(11), pages 66-76, November.
    3. Zdeněk Toušek & Jana Hinke & Barbora Gregor & Martin Prokop, 2023. "Importance of Working Capital Management and Its Components for Firm Profitability," Prague Economic Papers, Prague University of Economics and Business, vol. 2023(4), pages 367-388.

    More about this item

    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:taf:oaefxx:v:9:y:2021:i:1:p:1954318. 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.

    We have no bibliographic references for this item. You can help adding them by using 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: Chris Longhurst (email available below). General contact details of provider: http://www.tandfonline.com/OAEF20 .

    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.