Impact of Working Capital Management on Financial Performance: The case of Vietnam

Abstract

The research investigates the impact of working capital management on financial performance by using the data collected from listed firms on Ho Chi Minh Stock Exchange (HOSE). The sample is comprised of 69 public firms over the period of 3 years from 2014 to 2016. Using the variable Cash Conversion Cycle (CCC) as measurement for Working Capital Management, the research also takes the following variables in to consideration: “Growth, Cash flow, Liquidity, Risk, and Leverage” which are proven to have impacts on firm performance besides working capital management. Regarding the measurements of financial performance, the variables comprise of Return on Assets (ROA), Return on Equity (ROE), and Return on Sales (ROS). The results imply that Working Capital Management positively impacts the financial performance of firms in the sample. Thus, our study gives a new insight to managers on how to improve the financial performance with working capital management.