Working Capital Management Practices and Profitability of AIM Listed SMEs

Author:

Afrifa Godfred Adjapong1

Affiliation:

1. Department of Accounting and Finance and The Business School, Canterbury Christ Church University, Kent, UK

Abstract

This paper reports the results of an investigation of the effect of Working Capital Management (WCM) practices on profitability of Small and Medium Enterprises (SMEs) listed on the Alternative Investment Market (AIM), from the perspective of financial directors. Specifically, I look at their WCM target level practices, WCM alteration frequency and WCM strategy practices. The analyses are based on questionnaire distributed to 248 AIM listed SMEs. The paper employs OLS regression on responses from 72 managers of AIM listed SMEs. The results show that the WCM practices of AIM listed SMEs managers have an effect on profitability. However, the results show that given the limited resources of SMEs, the main focus of managers should be on the setting of specific target level for WCM so as to increase profitability.

Publisher

World Scientific Pub Co Pte Lt

Subject

General Engineering

Reference43 articles.

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1. Working capital, cash flow and profitability of intensive MSMEs: evidence from Ecuador;Journal of Entrepreneurship in Emerging Economies;2022-08-22

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3. THE IMPACT OF CORPORATE SOCIAL RESPONSIBILITY AND WORKING CAPITAL MANAGEMENT ON SMES PERFORMANCE DURING A PANDEMIC;Baltic Journal of Economic Studies;2021-12-27

4. THE MODERATING IMPACT OF ECONOMIC POLICY UNCERTAINTY ON THE RELATIONSHIP BETWEEN INVESTMENT IN WORKING CAPITAL AND PROFITABILITY;International Scientific Conference „Contemporary Issues in Business, Management and Economics Engineering";2021-05-18

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