The Impacts of Working capital management on Companies' performance: Evidence from Saudi industrial companies during the period 2000-2010

Abstract

This study aims to investigate the impact of working capital management on the performance of Saudi Public Shareholding industrial companies during the time period (2000-2010). The study sample consisted of fifteen companies During the period 2000-2010. The study has used two accounting measures of performance including return on assets (ROA) and return on equity (ROE). The independent variables include cash conversion cycle as a measure of working capital management (WCM), in addition to four control variables that are; leverage ratio (LEV), the current ratio (CR), sales growth rate (SG), and company's size. Using panel data regression, the study found that working capital management has a negative and significant impact on the performance of Saudi Industrial companies, meaning that the increase in cash conversion cycle reduces the performance of those companies.