Does Efficient Management of Working Capital have a Parallel Impact on the Profitability of Small and Large Firms?

Abstract

Working Capital Management has an overriding impact on a firm’s profit
performance. However, the profitability of large firms, unlike small ones, might
show a different degree of sensitivity to the efficient management of working
capital. One wonders as to which category of firms (small or large) exhibit more
escalation in their profitability as a result of a decent management of their working
capital. Exploring the answer to this query is the foremost aim of the present work.
To investigate, effect of working capital management was determined on
profitability of small and large organizations separately and their results were
compared. Findings from the comparison suggested that indicators of working
capital management had a more perceptible impact on profitability of firms of
relatively larger size. It is, thus, suggested for managers of large-sized corporations
to redouble their thought on effective and vigilant management of their working
capital so as to invigorate profitability.