The Impact of Working Capital Management on Corporate Performance: Evidence from Listed Non-Financial Firms in Ghana

Ibrahim Nandom Yakubu, Mohammed Mubarik Alhassan and Abdul-Aziz Fuseini

MPRA Paper from University Library of Munich, Germany

Abstract: Working Capital Management (WCM) plays a significant role in the successful operation of businesses due to its significant effect on corporate profitability and liquidity. This study empirically examines the impact of working capital management on the performance of non-financial firms in Ghana. Using secondary data of five listed non-financial firms for the period 2010-2015, the Random effect model was employed to establish the relationship that exists between the various components of working capital management and firm performance and whether these WCM components impact significantly on firm performance. The results show that average payment period and current ratio have a positive relationship with firm performance. Average collection period, inventory turnover, cash conversion cycle, and firm size on the other hand have a negative relationship with firm performance. However, only average collection period, average payment period, cash conversion cycle, and current ratio are found to have a significant impact on firm performance. The study recommends that managers of non-financial firms in Ghana should formulate sound working capital management policies that will enable firms to deal with liquidity challenges and enhance their performance.

Keywords: Working Capital Management; Performance; Non-financial firms (search for similar items in EconPapers)
JEL-codes: M00 M2 M41 (search for similar items in EconPapers)
Date: 2017-03-30
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

Published in European Journal of Accounting, Auditing and Finance Research 3.5(2017): pp. 68-75

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