The Relationship Between Working Capital Management and Profitability: Testing the Nonlinear Relationship in Borsa Istanbul Chemical, Petrolium, Rubber and Plastic Products Sector

Özet

The relationship between working capital management and profitability is extensively investigated in the literature; much of this literature tests this relationship using linear models. However, the relationship between the components of working capital, namely; receivables, inventories, trade payables and profitability, may not be linear. At low levels of receivables, inventories and trade payables, increasing the amount of working capital components may increase profitability up to a point, but above that point additional increases may harm profitability. The aim of this study is to test…

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