Work

The effect of working capital management on profitability: the case of small medium and micro enterprises in South Africa

Year: 2014

Type: article

Abstract: Working capital is vital in any business, especially in SMMEs, given that most of their assets are in the form of current assets. Management of working capital is vital in order to improve profitability of the business. This study investigated the effect working capital management on profitability, using fifteen South African SMMEs, listed on the Alt-X on the JSE, from 2008-2012, using a multiple regression analysis. The results show a positive relationship between number of days account receivable, number of day’s inventory and negative relationship between number of days payable and cash convention cycle. Thus minimizing working capital and decreasing the cash conversion cycle increases profitability and hence shareholder value.

Source: UWC Research Repository (University of the Western Cape)

Authors: Samuel Tabot Enow, Pradeep Brijlal

Language: English

Topic: Working Capital and Financial Performance

Subfield: Accounting

Field: Business, Management and Accounting

Domain: Social Sciences

SDG: Decent work and economic growth

Open Access status: green

OpenAlex ID: W606267334

FWCI: 8.483

Cites:

Cited by: 32

Related to: 10