The Influence of working capital management on Profitability of Companies listed in Tehran Stock Exchange

Subject Areas : Financial Economics

امید فرمان آرا ¹ ( دکتری اقتصاد دانشگاه تهران، مدرس دانشگاه آزاد اسلامی )
میثم عارف نژاد ² ( دانشجوی کارشناسی ارشد، گروه مدیریت، دانشگاه آزاد اسلامی، واحد الکترونیکی. )
محبوبه جعفری ³ ( عضو هیئت علمی، دانشگاه آزاد اسلامی، واحد تهران جنوب )

Received: 2015-12-18 Accepted : 2016-02-18 Published : 2016-06-09

Keywords: Keywords: Working Capital Management, Financial leverage, Profitability, Performance Indicator, JEL Classification: G31, G32, L26,

Abstract :

Abstract Economic enterprises are effectively participating in economic sphere. Two indicators of liquidity power and profitability financially determine this effectiveness. The so-called profitability is the sign of the firm's health and the power of liquidity is the survival sign of the economic enterprise. In other words, if a company is not profitable, then it's sick, but if there is no liquidity, its survival is in danger. While, both of these factors are important, but liquidity has a higher level of importance. The aim of this research is to investigate the relationship between financial leverage and working capital management and its impact on profitability and performance indicator of listed companies in Iran’s capital market. The statistical sample has been selected by using the available systematic elimination method that has been studied from 2010 to 2014. Research hypotheses were examined by using the linear regression, and regression results among the study sample showed that there is a positive and significant relationship between the combination of working capital and the economic value added of the companies listed in Tehran Stock Exchange, and this relationship will be reversed by the mediator impact of financial leverage; but this relationship was not observed among companies operating in Iran’s OTC market. The results also showed that the working capital combination does not have a significant impact on the variables of financial leverage and the ratio of return on equity in companies active in Tehran stock exchange organization and Iran's OTC market.

References:

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