The impact of working capital management on profitability of listed transportation and logistics companies in Malaysia

• Main Author: Tan, Chia Li
• Format: Thesis
• Language: English; English; English; English
• Published: 2020
• Subjects: HG Finance; HJ Public Finance
• Online Access: https://etd.uum.edu.my/10408/1/grant%20the%20permission_s823583.pdf; https://etd.uum.edu.my/10408/2/s823583_01.pdf; https://etd.uum.edu.my/10408/3/s823583_02.pdf; https://etd.uum.edu.my/10408/4/s823583_references.docx; https://etd.uum.edu.my/10408/

This study examines the impacts of working capital management on profitability of 31 listed transportation and logistics companies in Malaysia from year 2014 to 2018. Sample from same timeframe and industry in Singapore has collected and examined for the purpose of comparative analysis and better understanding on how working capital management functioned within transportation and logistics industry. This study has applied Random Effects GLS regression to investigate the relationship between the working capital management and profitability of firms. In this case, the firms profitability is measured by Return of Equity (ROE) ratio. The profitability of firms is investigated though account receivables management, inventory management, account payables management and cash conversion cycle. Fixed financial assets and financial debts also applied to examine their effects on profitability of firms. The result of this study shows that working capital components are negatively related with the profitability of firms. Fixed financial assets and financial debts are not significant, hence concluded that they have no influences on the profitability of firms. The results indicate short duration of account receivables turnover, inventories turnover and account payables turnover can bring higher profitability to firms. By examining the working capital management of transportation and logistics companies, readers could understand the relationship of liquidity and profitability in this industry. This study also suggests not to forget the shifting patterns of transportation and logistics industry which may directly affect the profitability of the industry.