Working Capital Management and Firms' Profitability in the Midst of an Economic Crisis

Dimitris Axiotis, Alina Hyz () and Petros Kalantonis
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Dimitris Axiotis: Technological Educational Institute of Piraeus, Athens, Greece
Petros Kalantonis: University of West Attica, Athens, Greece

International Journal of Applied Management Sciences and Engineering (IJAMSE), 2018, vol. 5, issue 2, 66-80

Abstract: The purpose of this article is to identify the relationship between working capital management and corporate performance in adverse economic circumstances. The results show positive relationship between profitability and cash conversion cycle, firm's size, growth and leverage and negative relationship between profitability and components of cash conversion cycle. Analysing the impact of the crisis it can observe that the companies can increase their profitability by reducing the period of credit granted to customers. The significance of this study stems from the fact that it sheds light for the desirable firms' policy during the period of financial constraints. Prior research on this subject has looked into various issues related to the linkage between working capital management and profitability, however, none has examined what this relationship looks like following a prolonged economic crisis.

Date: 2018
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