Research On The Relativity Between Working Capital Management And Enterprise Profitability

This paper pick data from 2009-2013 of 870 A-share listed companies in the manufacturing sector of Shanghai and Shenzhen Stock Exchange for study, it includes two aspects:First, analysis working capital management efficiency of China’s manufacturing industry listing corporation by descriptive statistical analysis; Second, use multiple linear regression analysis to discuss the correlation between working capital policy and corporate profitability, the correlation between working capital management efficiency and profitability of the business.Descriptive statistical analysis of the results show:On the one hand, in terms of working capital policy, the whole industry choose relatively conservative working capital investment policy, but a relatively aggressive working capital financing policy. Showing "a low, two high" situation:low liquidity ratio, high Current assets ratio, high Current liabilities ratio. On the other hand, in terms of the efficiency of working capital management, Working capital turnover efficiency of manufacturing industry listing Corporation is low in last 5 years, totally shows a downward trend. Cash conversion cycle and its internal structure (inventory turnover, accounts receivable turnover, accounts payable turnover) show a rising trend.Multiple regression analysis show that:on the one hand, in terms of the correlation between working capital policy and corporate profitability, the aggressiveness of working capital investment policy is positive related to the profitability of the business, the aggressiveness of working capital financing policy is weakly negative related to the profitability of the business, the liquidity ratio is also negative related to the profitability of the business. On the other hand, in terms of the correlation between working capital management efficiency and profitability of the business, cash conversion cycle and its internal structure (inventory turnover, accounts receivable turnover, accounts payable turnover) are negatively also negative related to the profitability of the business.