文章基本信息

标题：WORKING CAPITAL MANAGEMENT AND ITS INFLUENCE ON PROFITABILITY AND SUSTAINABLE GROWTH.
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作者：Nastiti, Pambayun Kinasih Yekti ; Atahau, Apriani Dorkas Rambu ; Supramono, Supramono 等
期刊名称：Business: Theory and Practice
印刷版ISSN：1648-0627
出版年度：2019
期号：January
出版社：Vilnius Gediminas Technical University
摘要：Introduction Working capital management aims to increase profitability and at the same time to enable firms to repay their mature liability by ensuring their liquidity (Pass and Pike 1996). Thus, it is necessary that firms balance these two objectives in their activities (Gitman 2011). Working capital management is closely related to the decisions on firms' asset composition and current liabilities that imply on firms' profitability (Adekola et al. 2017, Deloof 2003, Mannori and Mohammad 2012). Further, Misbah et al. (2015) indicates that working capital management is the essential element of firms' daily operating activities. Managerial inability to manage working capital will potentially create financial difficulties for firms (Smith 1973). On the contrary, firms with well-managed working capital are likely to demonstrate increased performance (Raheman and Nasr 2007). Previous studies have shown the effects of working capital management on liquidity (Adekola et al. 2017, Attom 2016) and profitability (Al-abass 2018, Deloof 2003, Hien Tran et al. 2017, Panda and Nanda 2018, Raheman et al. 2010, Raheman and Nasr 2007). The studies not only focus on larger firms as their sample firms (Altaf and Shah 2018, Atta et al. 2017, Bagh et al. 2016) but also on small and medium enterprises (Afrifa 2015, Afrifa and Tingbani 2018, Lamptey et al. 2017). Firms' ability to manage their working capital will not only increase their profits but also their growth. In relation to firms' growth, Higgins (1977) introduces the concept of sustainable growth rate that indicates firms' maximum sales growth without having to change their financing decisions. Sustainable growth rate refers to firms' maximum growth rate by only relying on internal financing, and not on additional financing (such as new investors or long-term liabilities). Ashta (2008) and Fonseka et al. (2012) suggest that firms base their operating activities on sustainable growth. Firms that operate above their sustainable growth are potentially prone to financial distress or even bankruptcy because of excessive financial leverage. Meanwhile, firms that fail to achieve sustainable growth run a risk of slow or even stagnant growth.