Abstract:

The aim of this study is to investigate the effect of working capital management on firm profitability and value. For this aim using data of 122 manufacturing firms traded in ISE for the period of 2000-2009. Liquidity ratios, receivable turnover and inventory turnover as independent variable, active turnover and leverage ratio as control variable, return on asset, return on equity and book value and market value ratios are used as the dependent variable at the study. The relationship is examined using panel data analysis. Also, the estimation results show that the relationship between firm profitability and current ratio and leverage ratio which are representative of working capital management is negative and quick ratio and inventory turn and asset turnover have a positive effect on profitability. On the other hand there is no significant relationship between elements of working capital with return on equity and market value.

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