Determinants of Working Capital Management: Evidence from Ethiopian Corporate Sector
Keywords:
cash conversion cycle, determinants of working capital management, working capital, working capital managementAbstract
Working capital management is an integral part of the overall management of a company. Its efficient management is believed to be detrimental to its survival. This study was conducted to investigate determinants of working capital management in Ethiopian corporate sector. Secondary data (income statement) and balance sheet of 353 companies from the period 2005 to 2014 were included. It used cash conversion cycle as a proxy for working capital management efficiency. The correlation and regression results showed that firm size, operating cash flow, asset tangibility have positive influence on cash conversion cycle, and leverage affects ccc negatively. However, asset tangibility has weak significance (10%) while the remaining are significant at 1%. Therefore, firms in Ethiopian corporate sector can improve their working capital management efficiency by focusing on the above variables.
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