Download This PaperWorking Capital Management, Operating Cash Flow and Corporate Performance
AlShattarat, W. K., Nobanee, H., Haddad, A. E., AlHajjar, M. (2010). Working Capital Management, Operating Cash Flow and Corporate Performance. International Journal of Strategic Management, 10 (1), pp. 84-88.
6 Pages Posted: 10 Sep 2009 Last revised: 14 May 2017
Date Written: November 1, 2010
Abstract
This paper investigates the relationship between working capital management, corporate performance and operating cash flow. The relationship is examined using dynamic panel data analysis. The analysis based on a sample of 5802 U.S. non-financial firms listed in the New York Stock Exchange, American Stock Exchange, NASDAQ Stock Market and the Over The Counter Market for the period 1990-2004 (87030 firm-year observations). The results suggest that managers can increase profitability and operating cash flow of their firms by shortening the cash conversion cycle, and by shortening the receivable collection period. The results also suggest that shortening the inventory conversion period and lengthening the payable deferral period reducing profitability and operating cash flow of firms instead of increasing them.
Keywords: working capital management, cash conversion cycle, receivable collection period, inventory conversion period, payable deferral period, operating cash flow, corporate performance
JEL Classification: G30, G32, L25, O25
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