The Relationship among the Components of Working Capital Management with Liquidity and Profitability in Food Industry

Document Type : Research Paper

Authors

• M Kavoosi Kalashami
• p Khaligh Khiavi

Assistant Professor, Department of Agriculutral Economics, Faculty of Agricultural Sciences, University of Guilan

Abstract

    The purpose of this study was to investigate the effect of working capital on liquidity and profitability of food industry companies listed in the Tehran Stock Exchange. The study community consisted of all food industry companies listed in Tehran stock exchange during 2009-2013 which were studied using panel data. This research used the variables of current ratio, current assets to current liabilities ratio, current assets to total assets ratio, current liabilities to total assets ratio and debt to total assets ratio as working capital index. Empirical results showed there is positive relationship between current assets to current liabilities Ratio, but there is negative relationship between current liabilities to total assets ratio and debt to total assets ratio with profitability. Also there is not any statistically significant between current assets to total assets ratio and profitability. The relationship between the components of working capital management with liquidity showed that there is negative relationship between current assets to current liabilities ratio with liquidity. On the other hand, there is positive relationship between current assets to total assets ratio with liquidity. Furthermore, there is not any statistically significant between current assets to current liabilities ratio and debt to total assets ratio with liquidity.

Keywords

• Working Capital
• profitability
• liquidity
• Tehran Stock Exchange
• Food Industry

20.1001.1.20086407.1397.10.38.7.9

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