Business, Management and Accounting
4 years ago

Working capital management impacts profitability in Indonesian listed firms.

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Asian Economic and Financial Review
Does Working Capital Management Affect Profitability? Empirical Evidence from Indonesia Listed Firms
Abdul Basyith, Abid Djazuli, Fitriya Fauzi

Paper Summary

The study looked at how managing working capital affects the profits of companies in Indonesia. They analyzed data from 135 listed firms in different industries from 2000 to 2019. The results showed that companies using a certain approach to investing in working capital had higher returns on assets. On the other hand, companies using a specific strategy to finance working capital had lower profits. Different industries had varying levels of aggressiveness in their working capital management.

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