EFFICIENCY OF WORKING CAPITAL MANAGEMENT AND CORPORATE PROFITABILITY: A CASE OF JORDANIAN INDUSTRIAL COMPANIES

Abstract

This paper aim to investigate the relation between working capital management and corporate profitability for a sample of 59 Jordanian industrial firms listed on Amman Stock Exchange for a period of 4 years from 2004 – 2007. The researcher studied the effect of different variables of working capital management including the Average collection period, Inventory turnover in days, Average payment period, Cash conversion cycle and Net trade cycle, on the Net operating profitability and Gross Profit as measures of profitability of Jordanian Industrial firms. Debt ratio, size of the firm (measured in terms of sales) and Current ratio and Sales Growth ratio have been used as control independent variables.