The Impact of Working Capital Management on the Egyptian Financial Profitability

Abstract

The main aim of this research is to examine the effect of working capital on the profitability of the Egyptian firms. This study aims to provide empirical evidence for the relationship between working capital management and profitability of a sample of 21 firms who are listed in the EGX 30 during the period pf time of 2013 to 2017. Accordingly; the impact of working capital management on the firm's profitability is tested by using panel data methodology. The model was estimated by using fixed effects model as Hausman test chooses fixed effects specification over a random effects specification. The study used 2 proxies for profitability which are ROA and ROE; in addition the study used current assets, current liabilities and total equity as proxy of working capital. The findings of the study came in line with our expectations of the theory.