THE IMPACT OF WORKING CAPITAL MANAGEMENT ON PROFITABILITY: AN ANALYSIS ON COMPANIES IN THE BIST WHOLESALE AND RETAIL SECTOR

Abstract

Three crucial fields of activity such as production, sales, and collection are important determinants of the economic lives of companies. Working capital management ensures that these activities are conducted in a short period at the lowest cost incurred by the company. Particularly, the costs incurred due to time-based, inventory, and cash assets adversely affect the profitability levels of companies. In the research study, the financial information of 21 wholesale and retail companies trading in Borsa Istanbul over the period 2017-2021 was analyzed employing the panel data method. The information obtained from the financial statements of the companies was assessed within the scope of working capital management and profitability by utilizing the ratios such as inventory turnover, accounts receivables turnover, accounts payables turnover, cash conversion cycle, leverage ratio, and current ratio. The results revealed that a significant relationship exists between the return on assets of the companies and the inventory turnover, cash conversion cycle, accounts payable turnover, and leverage factors, whereas between the return on equity of the companies and inventory turnover, accounts receivable turnover, and cash conversion cycle