Kauppakorkeakoulu | Laskentatoimen laitos | Laskentatoimi | 2015
Tutkielman numero: 14121
The determinants of working capital management and its effect on profitability - evidence from Nordic listed companies during 2000-2012
|Otsikko:||The determinants of working capital management and its effect on profitability - evidence from Nordic listed companies during 2000-2012|
|Vuosi:||2015 Kieli: eng|
|Asiasanat:||laskentatoimi; accounting; pääoma; capital; kannattavuus; profitability; pörssiyhtiöt; exchange-listed companies; Pohjoismaat; Scandinavia|
|Avainsanat:||working capital, working capital management, Cash Conversion Cycle, profitability|
OBJECTIVES OF THE STUDY:
The goals of this study were to find out the determinants of Working Capital Management and whether Working Capital Management influences companies' profitability. The study also investigates differences in Working Capital Management practices between industries and countries. In addition, the methods of improving Working Capital Management are of interest.
DATA AND METHODOLOGY:
The sample consisted of exchange listed companies in Finland, Sweden, Norway and Denmark during 2000-2012. The data was gathered from Thomson One Banker and Bloomberg databases. The research questions were studied using statistical analysis with SPSS statistics software. The method used was linear regression.
The results show that the Cash Conversion Cycle has decreased during the sample period. This finding is universal for all industries and countries studied. I also find that there seems to be a notable decrease in the level of the Cash Conversion Cycle after the financial crisis. I find that there is significant intra-industry variation concerning the Cash Conversion Cycle. The results don't indicate substantial differences in the Cash Conversion Cycle between the Nordic Countries. In addition, the results show a statistically significant relationship between profitability and the Cash Conversion Cycle.
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