The Impact of Company Characteristics on Working Capital Management

Hashem Valipour, Javad Moradi and Fatemeh Dehghan Farsi

Journal of Applied Finance & Banking, 2012, vol. 2, issue 1, 5

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.

Date: 2012
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