The effect of working capital management on the profitability of publicly listed firms across the four sectors in the Philippine economy: Industrial sector, mining and oil sector, property sector, and services sector
Date of Publication
2016
Document Type
Bachelor's Thesis
Degree Name
Bachelor of Science in Management of Financial Institutions
College
Ramon V. Del Rosario College of Business
Department/Unit
Financial Management
Thesis Adviser
Junette A. Perez
Defense Panel Member
Albao, Marycris O.
Joyce Anne Alimon
Abstract/Summary
Cash is an essential asset in a company and while holding onto an amount of cash, what should a firm do? Working capital management refers to the management of short-term investments and financing of a company. This study investigates the effect of working capital management, its components (accounts receivables period, accounts payables period, inventory period, and cash conversion cycle) on firm profitability. The study uses a sample of 118 publicly listed firms across the four sectors (industrial sector, mining and oil sector, property sector, and services sector) in the Philippines. This paper adopts a quantitative approach using OLS pooled regression and panel regression in determining the effect of working capital management on firm profitability. The results of this study indicate that working capital management, its components, significantly affects firm profitability. Cash conversion cycle, accounts receivables period, and inventory period are shown to negatively affect profitability, which indicates that as these independent variables increase, profitability decrease and vice versa. On the other hand, accounts payables period is found to positively affect profitability, which indicates that profitability increases together with this variable. And some of the ways to increase a firm's profitability, based on this study are: first is by shortening accounts receivables period, second is by extending accounts payables period, third is by shortening inventory period, and finally keeping the cash conversion cycle at a minimum. Firms can create positive insights from this study by being able to manage working capital effectively and efficiently.
Abstract Format
html
Language
English
Format
Accession Number
TU19493
Shelf Location
Archives, The Learning Commons, 12F, Henry Sy Sr. Hall
Physical Description
144, 4 leaves : illustrations (some color) ; 28 cm. + 1 computer disc ; 4 3/4 in.
Keywords
Working capital--Philippines
Recommended Citation
Espiritu, A., Fortuno, J., Montealto, M., & Pilar, Y. (2016). The effect of working capital management on the profitability of publicly listed firms across the four sectors in the Philippine economy: Industrial sector, mining and oil sector, property sector, and services sector. Retrieved from https://animorepository.dlsu.edu.ph/etd_bachelors/10096