The Impact Of Working Capital Management On Profitability: A Case Of Public Listed Firms In Malaysian Energy Industry

Yew, Cynthia Ho Ai (2023) The Impact Of Working Capital Management On Profitability: A Case Of Public Listed Firms In Malaysian Energy Industry. [Final Year Project Report] (Unpublished)

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Abstract

This study examines the association between working capital management and firm profitability for a sample size of 30 listed firms in Malaysian energy sector over the period of 2012–2021. Specifically, this study wants to examine the effect of days sales outstanding (DSO), days inventory outstanding (DIO), and days payable outstanding (DPO) on return on assets (ROA). Two theories have guided this study which are efficient market hypothesis theory (EMH) and cash conversion cycle theory (CCC). Panel regression analysis and Pearson’s correlation coefficient were used to test the hypothesis. The analysis result indicates that firstly; the results are consistent with cash conversion theory. Secondly, there is existence of significant negative relationship between days sales outstanding, days inventory outstanding, and return on assets, which is firm’s profitability. The result also shows a significant positive relationship between days payable outstanding and profitability of a firm.

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