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Impact of working capital management on profitability of the food processing and consumer goods business in New Zealand


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The purpose of this study is to investigate the impact of working capital management (WCM) on the profitability of fifteen food processing and consumer service business listed in the New Zealand Exchange Board. The data were collected through the annual reports of the companies for five years and arranged by using Excel. The working capital was measured by it components like Account receivable period, Account payable period, Inventory conversion period, and cash conversion period. Whereas profitability was measured by Return on Assets, Return on Equity and Net profit margin. To analyse the relationship between WCM and profitability, regression analysis and correlation were used by making WCM components as independent variables and profitability as dependent variables. The correlation result reveals that there is negative relationship between the WCM components and profitability, and longer CCC leads to less profitability of the firm. Whereas the regression result reveals the negative relationship between ICP and ROA. Similarly, there is a negative relationship between ARP and ROE, and also between APP and NPM. Therefore, it is concluded that WCM have very much impact on the profitability of the business and businesses are recommend to decrease their ICP, ARP and CCC in order to increase profitability.

Item Type: Paper presented at a conference, workshop or other event, and published in the proceedings
Uncontrolled Keywords: management, business, food industry
Subjects: H Social Sciences > HF Commerce
Divisions: Schools > Centre for Business, Information Technology and Enterprise > School of Business and Adminstration
Depositing User: Adrian France
Date Deposited: 26 Nov 2018 02:15
Last Modified: 21 Jul 2023 07:30

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