Working capital management influence profitability: case of property industry in Malaysia / Khairul Fazlan Ab Aziz

The firm’ performance whether got higher profitability or not is depends on the working capital of a firm. The definition of working capital management is the way in organized the firm in order to continue its operations and it has sufficient ability to satisfy both short-term debt and upcoming operational expenses. In simple word, working capital management is the administration of current asset and current liabilities. A firm should managed their working capital efficiently and effectively to get more profitability. Working capital is the most important factor for maintaining liquidity, survival, solvency and profitability of business (Mukhopadhyay, 2004). If any firm are unable in order manage their working capital wisely, there probably effect in term of their profitability of the firm but also can lead to financial crisis. Then it’s a matter that give importance effect on how can the firms manage their working capital in the correct way in order to ensure that the firm or company to profit or not. Under this research, the researcher examine the effect of different variables of working capital that will be used in this research such as average collection period, average payment period, inventory turnover, cash conversion cycle and current ratio.