Working Capital Management & Corporate Profitability during the Global Financial Crisis: evidence from Greece
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2018-09-18
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en
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Abstract
This study examines the effect of Greek crisis, triggered by the recent global financial crisis, on the working capital–profitability relationship based on a sample of 125 listed companies listed in the Athens Stock Exchange (ATHEX) from 2002 to 2013. The results suggest that cash conversion cycle has a negative correlation with corporate profitability, and this relation is even more profound during the Greek crisis. The results further reveal that the impact of efficient inventory management, speedy collection of accounts receivable and shorter payable cycles is apparent on profitability during the crisis. Working capital management should, thus, be considered as a vital component of a company’s financial planning while a firm’s agility during severe external factors (e.g. financial crisis) may create a competitive advantage.
Keywords: Greek crisis, working capital management, profitability, cash conversion cycle
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Faculteit der Managementwetenschappen