Abehodie, Wolleia (P.HD)Mekonnen, Mulualem2021-05-192023-11-042021-05-192023-11-042011-06http://etd.aau.edu.et/handle/123456789/26460The purpose of this study is of investigate the impact of working capital management on firms' profitability. The study aims to examine the statistical significance between firms working capital management and profitability. In light of this objective the study adopted quantitative method a/research approaches to test a series research hypothesis. the study used surrey of documentary analysis of companies' audited financial salesmen’s. Stratified sampling design was employed based on nature and turnover of companies. Then companies were selected based on simple random sampling method from each stratum’s to avoid biases and represent firms each sub class classification (stratum 's) within manufacturing companies. Consequently, the study selected a sample of thirteen (13) companies for the period of five years (2005-2009) with the total of 65 observations. Dale was then analyzed on quantitative basis using Pearson’s correlation and OLS regression analysis. The results showed that there is statistical s significance negative relations hip between profitability and working capital management. It means that, companies managers can create profits or' value for their companies and share holders by handling correctly the cash Converseion cycle and keeping each different component a/working capital to a possible optimum level. The researcher found that there is a significant negative relationship be/wean liquidity and profitability. Moreover the study finds that there is strongly significance positive relationship between size and firm profitability. Unlike, the study found that there is on statistically significance negative relationship between debt used and firms profitability. Keywords: working capital, working capital management, firm size. cash conversion cycle and profitability.enWorking CapitalWorking Capital ManagementThesis