The Effect of Working Capital Management on Profitability: Evidence from Malaysian Construction Firms

Authors

  • Chooi Yin You Universiti Malaysia Sarawak, Kota Samarahan

DOI:

https://doi.org/10.33736/uraf.3528.2021

Keywords:

Working Capital Management, Construction Firms, Malaysia, Profitability

Abstract

Working capital management is an essential part of a sound business. The main objective of this research is to investigate the effect of working capital management on profitability. The regression analysis was carried out on a panel sample of 30 construction firms listed on Bursa Malaysia over a five-year period from 2015 to 2019. The findings suggest that there is a significant positive relationship between Days Inventory Outstanding (DIO) and Gross Operating Profit (GOP) as well as a significant negative relationship between Days Payables Outstanding (DPO) and GOP. Thus, firms can maximise their profitability by maintaining higher inventory level and paying off creditors in a shorter time frame.

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Published

2021-12-17

How to Cite

You, C. Y. (2021). The Effect of Working Capital Management on Profitability: Evidence from Malaysian Construction Firms. UNIMAS Review of Accounting and Finance, 5(1), 81–100. https://doi.org/10.33736/uraf.3528.2021

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Articles