Working capital management and firms performance: A case of Manufacturing Firms listed on HOSE

Abstract

The impact of working capital management on firms’ performance has been a controversial issue recently since there exist many opposite findings about this. To clarify this, I have conducted on my own a study investigating the relationship between working capital management and firms’ profitability taking sample of 71 manufacturing firms listed on HOSE over the period 2009-2011. Variables taken to test this relationship include return on asset (ROA) used as dependent variable; average collection period (ACP), average age of inventory (AAI) and average payment period (APP) used as independent variables and firm size (LnS), debt ratio (DR), sales growth (SG) and beta (Beta) used as control variables. The findings show positive relationship between AAI and ROA, CCC and ROA; and no significant relationship between ACP and ROA or APP and ROA. It is suggested that since the results are not true for every situation, companies then need to consider every aspect of firms’ and economic status before deciding which method they should follow.