Business Management Dynamics

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ISSN: 2047-7031

bmd Business and Management Dynamics bmd
ISSN: 2047-7031  
Volume  2   Issue 7  2013  
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Article Abstract
Studying the relationship between working capital management and profitability of listed companies in Tehran stock exchange
Keywords:  working capital, working capital management profitability return on assets, return on equity
Seyed Mohammad Alavinasab and Esmail Davoudi
Present study examines the relationship between working capital management and profitability for listed companies on Tehran stock exchange. 147 companies were selected for the period of 2005-2009. The effect of various variables of working capital management including cash conversion cycle (CCC), the current ratio (CR), current asset to total asset ratio (CATAR), current liabilities to total asset ratio (CLTAR) and debt to asset ratio (DTAR) on return on assets and return on equity are studied. Multivariate regression and Pearson correlation are used to test hypothesis. The results of the statistical test of the hypothesis show a negative significant relationship exist between cash conversion cycle (CCC) and return on assets and there is also a negative significant relationship between cash conversion cycle (CCC) and return on equity. However, the relationship between current ratio and return on equity is insignificant.
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