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Relationship Between Working Capital Management and Profitability of Listed Companies in the Athens Stock Exchange

Journal of Financial Management and Analysis, Vol. 19, No. 1, January-June 2006

12 Pages Posted: 20 Sep 2006  

Ioannis Lazaridis

University of Macedonia - Accounting and Finance

Dimitrios Tryfonidis

University of Macedonia - Accounting and Finance

Abstract

In this paper we investigate the relationship of corporate profitability and working capital management. We used a sample of 131 companies listed in the Athens Stock Exchange (ASE) for the period of 2001-2004. The purpose of this paper is to establish a relationship that is statistically significant between profitability, the cash conversion cycle and its components for listed firms in the ASE. The results of our research showed that there is statistical significance between profitability, measured through gross operating profit, and the cash conversion cycle. Moreover managers can create profits for their companies by handling correctly the cash conversion cycle and keeping each different component (accounts receivables, accounts payables, inventory) to an optimum level.

Keywords: Corporate profitability, Working capital, Athens Stock Exchange

JEL Classification: G30, M41, O52

Suggested Citation

Lazaridis, Ioannis and Tryfonidis, Dimitrios, Relationship Between Working Capital Management and Profitability of Listed Companies in the Athens Stock Exchange. Journal of Financial Management and Analysis, Vol. 19, No. 1, January-June 2006. Available at SSRN: https://ssrn.com/abstract=931591

Ioannis Lazaridis (Contact Author)

University of Macedonia - Accounting and Finance ( email )

156 Egnatia Str.
Thessaloniki, 54006
Greece

Dimitrios Tryfonidis

University of Macedonia - Accounting and Finance

156 Egnatia Str.
Thessaloniki, 54006
Greece

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