Effects of working capital management on firm's performance in seafood industry

Abstract

Working capital management is now very important for business survival. However, Vietnam seafood industry is very special with some particular characteristic of working capital management which are different with others industry. The main object of this study is to investigate the effect of working capital management on firms‟ performance in seafood industry. The study use four components of working capital (Average Collection Period, Average Payable Period, Days On Inventory, Cash Conversion Cycle) as measure of working capital and Return on Assets as assess of profitability. This study conducts the interview with two experts in seafood industry to investigate how they control working capital. In addition, this study also applies penal data methodology for 20 companies in seafood industry from 2007 to 2014 to analyze the relationship between working capital management and firms‟ performance. The results show that working capital management has very little relationship with firms‟ performance in seafood industry. From the results of this study, managers in seafood companies should focus on others aspect of company, such as: asset management, capital structure, price of output, quality of product to increase their profitability.