Impacts of Working Capital Management on Firms Profitability; (the Case of Hawassa City Manufacturing Enterprises)
Year: 2025
Type: article
Abstract: The purpose of this study is to investigate the impact of working capital management on firms’ profitability. In light of this objective the study adopted quantitative method of research approaches to test a series research hypothesis. Specifically, the study used survey of documentary analysis of companies’ audited financial statements. Purposive sampling design was employed based on their ages and reliable document information. Consequently, the study selected a sample of sixteen (16) companies out of total population 64 manufacturing enterprises for the period of six years (2015- 2020) with the total of 64 observations. Data was then analyzed using Pearson’s correlation and OLS regression analysis. The results showed that there is statistical significance negative relationship between profitability and cash conversion cycle. The researcher found that there is a significant negative relationship between average payable period and profitability. Moreover the study finds that there is strongly significance positive relationship between average collection period with firm profitability and liquidity shown mixed positive and negative relationship with profitability. To fix these gap managers of Hawassa city manufacturing enterprises should use conservative working capital policy. This helps to minimize bad debit and liquidation risks and increase profitability. Finally, to keep going concern of the business that is one of the GAAPs’ principle, Hawassa manufacturing enterprises should set platform to minimize their CCC to realize firms’ profitability through managing WC efficiently and effectively
DOI: 10.20372/nadre:19318
Author: AYELE ALAWO
Language: English
Subfield: Accounting
Domain: Social Sciences
Open Access status: green
OpenAlex ID: W7084580893
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