Impact of Working Capital Management on Firms’ Performance: Evidence from Large Taxpayer Printing Firm’s in Addis Ababa, Ethiopia

No Thumbnail Available



Journal Title

Journal ISSN

Volume Title


Addis Ababa University


A well managed working capital promotes a firm’s profitability and it also acts in favor for the growth of shareholders value. Many researchers have indicated that, firms cannot survive and continue their daily operations without sufficient level of working capital. Moreover, large numbers of business failures in the past have been blamed on the inability of the financial manager in managing working capital of firms. Previous researches have examined the relationship between working capital management and firm’s performance. The main objective of this study was to investigate the impact of working capital management on profitability of large tax payer printing firms. This study examined the impact of working capital management on firm’s performance by using financial statements of large taxpayer printing firms in Addis Ababa, Ethiopia from the period of 2011 to 2015. In this study, return on asset (ROA) was used as a dependent variable while cash conversion period, Accounts collection period, inventory conversion period, current ratio and firms size were used as an independent variables. The data was analyzed using descriptive and regression analysis method. Statistical analysis was computed by using Eviews version 9. In agreement with the hypothesis of this research, the regression analysis has shown that working capital management components have a significant impact on firm’s performance. The result of this study has also indicated that inventory conversion period, account collection period and current ratio have significant negative relation with profitability but positive significant relationship between cash conversion cycle and profitability. However, the researcher found insignificant negative relationship between the size of firm and profitability. Therefore, managers of large taxpayer printing firms can maximize firm’s value and profitability by improving management of working capital component at optimal level. Key terms: Working capital management, Printing firms, profitability



Working capital management, Printing firms, profitability, profitability