Working Capital Management

EFFECT OF WORKING CAPITAL MANAGEMENT ON positivity OF FIRMS IN MALAYSIA ( M. A., Zariyawati a, M. N., Annuar b and A.S., Abdul Rahim c a ,b & c Univeristi Putra Malaysia, Malaysia. ABSTRACT operative with child(p) management is important part in firm fiscal management decision. An best working large(p) management is anticipate to contribute positively to the creation of firm value. To reach optimum working capital management firm manager should check the trade off amid profitability and liquidity accurately. The solve of this study is to investigate the relationship between working capital management and firm profitability. Cash conversion cycle is utilise as measure of working capital management. This study is use panel data of 1628 firm-year for the period of 1996-2006 that consist of six variant economic sectors which are listed in Bursa Malaysia. The coefficient results of Pooled OLS regression analysis put forward a strong negative significant relationship between funds conversion cycle and firm profitability. This reveals that reducing cash conversion period results to profitability increase. Thus, in purpose to make shareholder value, firm manager should concern on quash of cash conversion cycle till accomplish optimal level.

Keywords: Working Capital Management, Cash Conversion Cycle, Profitability and Liquidity INTRODUCTION Working capital is an important issue during pecuniary decision making since its being a part of investment in asset that requires appropriate financing investment. However, working capital always being disregard in financial decision making since it bespeak investment and financing in short condition period. Further, alike act as a restrain in financial performance, since it does not contribute to return on equity (Sanger, 2001). Though, it should be critical for to a firm to sustain their short term investment since it will ensure the ability of firm in longer period. The crucial part in managing working... If you want to arrest a full essay, order it on our website: Orderessay

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