Open AccessWorking Capital Management Effect on the Performance of Wholesale and Property Industry in Malaysia
Author(s) -
Lee Hui Shan,
Yow Taw Onn,
Sin Yee Lee,
Sim Kee Chuan
Publication year - 2015
Publication title -
journal of economics and behavioral studies
Language(s) - English
Resource type - Journals
ISSN - 2220-6140
DOI - 10.22610/jebs.v7i5(j).602
Subject(s) - working capital , return on assets , business , return on capital employed , shareholder , profitability index , current asset , leverage (statistics) , finance , proxy (statistics) , fixed asset , operating margin , profit (economics) , market value added , earnings before interest and taxes , industrial organization , monetary economics , enterprise value , economics , microeconomics , corporate governance , financial capital , capital formation , machine learning , production (economics) , computer science
This paper provides the influence of working capital management (WCM) on the performance of public listed wholesale & retail industry and property industry in Malaysia from 2002 to 2011. Regression model is employed by using two measures of companies’ performance namely Return on Assets, ROA (proxy to gauge the firm’s profitability) and Tobin’s Q, TQ (proxy to gauge the firm’s market value) as the dependant variables. WCM components include Current Liabilities to Total Assets Ratio and Current Assets to Total Assets Ratio with three control variables which include of Firm Size (SIZE), Sales Growth (SLGR) and Financial Leverage (LEV) as the independent variables. The results to a very large extent indicate that CATAR and SIZE have significant positive effect on the performance of firm. It suggests that wholesale & retail industry and property industry in Malaysia should pursue unadventurous investment strategy by implementing high altitude of short term investment in order to make profit and create value for their shareholders. It also reveals that the larger the firms are, the more profitable they are; recommending the firms shall expand their business to achieve higher profit and accomplish shareholder wealth maximisation.