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How can companies increase their profitability by effectively managing their working capital? - Evidence from the automobile manufacturing industry
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This paper investigates the relationship between working capital management and
profitability in the automobile manufacturing industry. It was found that Cash Conversion
Cycle (CCC) negatively impacts profitability. As lower CCC leads to higher profitability, this
study provides information on which turnover ratios are the best levers to impact companies’
CCC. Furthermore, there are significant differences in CCC and Return on Assets (RoA)
within the automobile manufacturing industry between Asian and Non-Asian companies.
Moreover, the automobile manufacturing industry and the automotive supplier industry (often
grouped together as “automotive” industry) differ significantly in their CCC and RoA levels.
Descrição
Palavras-chave
Cash conversion cycle Working capital management Profitability Automobile manufacturing industry Accounting turnover ratios