Effect Of Working Capital Management On Firm Profitability In Malaysia Construction And Materials Sector

Siaw, Yee San. (2014) Effect Of Working Capital Management On Firm Profitability In Malaysia Construction And Materials Sector. [Final Year Project Report] (Unpublished)

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Abstract

This study investigated the effects of working capital management on firm profitability in Malaysia construction and materials sector. A sample of 78 companies listed in Bursa Malaysia for a period of 2008 to 2012 are selected in this study. The purpose of this study is to investigate the relationship between the profitability, cash conversion cycle and its components which are the inventory conversion period, receivable collection period and payable collection period in Malaysia construction and materials sector. Fixed effect regression models are used in the study for data analysis and interpretation. The results of the study revealed that there is significant negative relationship between the cash conversion cycle, its components and profitability. It is found that increasing cash conversion cycle, inventory conversion period, receivable collection period and payable collection period will lead to decreasing profitability in the companies. Thus, financial managers can enhance the firms’ profitability by decreasing the cash conversion cycle, inventory conversion period, receivable collection period and payable collection period.

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