Skip to content
Research Article Open access CC BY 3.0

The Relationship between Working Capital Management and Profitability: Evidence from Saudi Cement Companies

Ahmad Aref Almazari

Journal of Economics, Management and Trade · pp. 146–157 · Published 26 Oct 2013

10.9734/BJEMT/2014/5427

Abstract

Aims: This paper investigated the relationship between the working capital management (WCM) and the firms’ profitability for the Saudi cement manufacturing companies. Methodology: There are 13 Saudi cement manufacturing companies operating in the market. Only eight companies were included which are listed in the Saudi stock exchange market (Tadawul) and were established before the year 2005, and the rest were excluded for the period of 5 years from 2008-2012. Results: The study results showed that, Saudi cement industry current ratio is the most important liquidity measure which effected profitability, therefore, the cement firms must set a trade-off between these two objectives so that, neither the liquidity nor profitability suffers. It was also found, as the size of a firm increases, profitability increased. Besides, when the debt financing increased, profitability declined. Linear regression tests confirmed a high degree of association between the working capital management and profitability. Conclusion: The Saudi cement firms could strengthened their working capital in more efficient ways by adopting more advanced financial devices which will help them to manage cash, accounts receivables and inventories, and will ultimately increase their profitability. There is much to be done about working capital in Saudi Arabia in future.

Working capital gross operating profits cash conversion cycle payables deferral period

Cited by 20

SPECIFICS OF FORMATION AND EFFECTIVE USE OF CURRENT ASSETS IN CONSTRUCTION

T. E. Chetin · Herald of Dagestan State Technical University. Technical Sciences · 2019

A multiple objective stochastic programming model for working capital management

Hatem Masri, Yomna Abdulla · Technological Forecasting and Social Change · 2018

Working Capital Management and Performance of Kuwait Construction Companies

Haitham Nobanee, Nejla Ellili · SSRN Electronic Journal · 2017

The Effect of Working Capital Management on Firms’ :Performance Evidence from Algerian Listed Firms

Boussouf Azzeddine, Belkaid Ibrahim · Dirassat Journal Economic Issue · 2021

The Relationship between Working Capital Management and Profitability

Nasser A. Alsulayhim · International Business Research · 2019

Working Capital Management Strategies in Nepalese Institutional Schools

Dharma Raj Upreti, V. P. R. P. Venkata · Open Journal of Business and Management · 2021

The Influence of Working Capital Management on the Profitability of Manufacturing Enterprises - The Case of Croatia

Milan Stanić, Melita Cita, Marina Stanić Šulentić · South East European Journal of Economics and Business · 2023

Accounting Education, Knowledge Management and Working Capital Management Performance: Evidence from China

Lei Ruan, Chunyan Li · EURASIA Journal of Mathematics, Science and Technology Education · 2017

Article metrics

Real usage data collected on this platform.

0

Page views

0

PDF downloads

0

Outbound clicks

20

Citations

Views by country

Approximate, from request IP at view time — not citizenship or institution. Countries with fewer than 5 views are grouped as "Other".

No views recorded yet.

Traffic sources

Referring site, by host.

No traffic recorded yet.

Views and downloads exclude known bots/crawlers. Citations combines this platform's own DOI-resolved index with each external source's own reported total — see Cited by above for individually listed citing works. Last refreshed 0 seconds ago.