İşletme Sermayesi Yönetiminin Firma Performansı Üzerindeki Etkisi: Çimento Şirketleri Üzerine Bir Araştırma
The Effect of Working Capital Management on Firm Performance: A Study on Cement Companies

Summary/Abstract: Purpose – The aim of the study is to investigate the impact of working capital management on firm profitability with a sample of 16 cement firms with shares traded in Borsa Istanbul and listed in XTAST (BIST Stone and Soil Sector) index. Design/methodology/approach – A balanced panel dataset for firms’ annual data for the 16 years between 2003 and 2018 is formed. Alternative models utilizing ROA (Return on Assets) and ROE (Return on Equity) as dependent variables are originated. Cash conversion cycle; and three determinants of this cycle, namely, investory turnover, accounts receivable turnover and accounts payable turnover are the independent variables capturing working capital management. Main methodology employs panel regression analysis. Findings – A main finding in the analyses suggests that cash conversion cycle does not have a significant effect on the profitability of cement firms within studied time span. Moreover, we provide evidence on the negative impact of inventory turnover on firm profitability. While partial evidence exists on the positive effects of accounts receivable turnover and accounts payable turnover, documented finding disappears in the use of models incorporating time fixed effects. Two firm specific control variables, firm size proxied by net sales and leverage ratio have positive and negative effects on profitabiliy, respectively. Discussion – The study provides fresh evidence on the role of working capital management on firm performance. The findings focused on cement sector shed new light on how firm profitability is affected by different components of working capital management. Among the obtained findings, absence of a significant relationship between cash conversion cycle and profitability may suggest that the profitability of cement companies in Turkey is more likely determined by other factors such as leverage ratio, firm size, macroeconomic variables and other time effects.

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