Title: THE ASSOCIATION BETWEEN WORKING CAPITAL MANAGEMENT AND PROFITABILITY OF NON-FINANCIAL COMPANIES LISTED ON THE ZIMBABWE STOCK EXCHANGE
Abstract: The main purpose of this study was to determine the impact of different components of working capital management on profitability of firms listed on the Zimbabwe Stock Exchange during the dollarization era. A random effects model was estimated using company financial data for the period 2010 -2012. These data were obtained from the Central African Stock Exchanges Handbooks. Thirty two companies listed on the Zimbabwe Stock exchange had usable data and therefore the random effects model was estimated using data from 32 non-financial companies listed on the Zimbabwe Stock Exchange. The regression results show that profitability was not associated with receivables collection period, inventory conversion period, cash conversion cycle, quick ratio, current asset to total asset ratio, current liabilities to total asset ratio, debt ratio and age of company. However, a negative and significant relationship between payables deferral period and profitability was found. In addition, liquidity and size were found to enhance profitability of firms. Therefore Zimbabwean firms should pay more attention to the management of liquidity and payables.
Publication Year: 2014
Publication Date: 2014-01-01
Language: en
Type: article
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Cited By Count: 11
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