How the working capital management influences companies' profitability: case study of Greek pharmaceutical companies
by Dimitris Axiotis; Alina Hyz; Petros Kalantonis
International Journal of Entrepreneurship and Small Business (IJESB), Vol. 37, No. 4, 2019

Abstract: This study examines the relationship between working capital management and firm's profitability for the period before and after last economic crisis in Greece. We use as a sample Greek pharmaceutical industry. We examine as a dependent variable return on assets ratio, as explanatory variables: cash conversion cycle, days inventory outstanding, days sales outstanding and days payables outstanding and as control variables: firm's growth, leverage and firm's size. The results, based on the implementation of descriptive statistics, Pearson's correlation and regression analysis show: 1) positive relationship between profitability and cash conversion cycle, firm's size, growth and leverage; 2) negative relationship between profitability and components of cash conversion cycle. The impact of economic crisis on these relationships is also analysed.

Online publication date: Thu, 22-Aug-2019

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