Working Capital Management Practices and Profitability of AIM Listed SMEs

Journal of Enterprising Culture Vol. 21, No. 4 (December 2015) 1–23 DOI: 10.1142/S0218495815001473

31 Pages Posted: 20 Oct 2013 Last revised: 11 Feb 2016

Date Written: October 17, 2013

Abstract

This paper reports the results of an investigation of the effect of Working Capital Management (WCM) practices on profitability of Small and Medium Enterprises (SMEs) listed on the Alternative Investment Market (AIM), from the perspective of financial directors. Specifically, I look at their WCM target level practices, WCM alteration frequency and WCM strategy practices. The analyses are based on questionnaire distributed to 248 AIM listed SMEs. The paper employs OLS regression on responses from 72 managers of AIM listed SMEs. The results show that the perception of AIM listed SMEs managers regarding the WCM practices has an effect on profitability. However, the results show that given the limited resources of SMEs, the main focus of managers should be on the setting of specific target level for each component of WCM so as to increase profitability.

Keywords: WCM practices, Profitability, SMEs listed on the AIM

JEL Classification: G30, G31, G32

Suggested Citation

Afrifa, Godfred, Working Capital Management Practices and Profitability of AIM Listed SMEs (October 17, 2013). Journal of Enterprising Culture Vol. 21, No. 4 (December 2015) 1–23 DOI: 10.1142/S0218495815001473, Available at SSRN: https://ssrn.com/abstract=2341729 or http://dx.doi.org/10.2139/ssrn.2341729

Godfred Afrifa (Contact Author)

University of Kent ( email )

Canterbury, CT2 7NP
United Kingdom

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