The Effect of Cash Conversion Cycle on Profitability of Small and Medium Sized Enterprises.

Working capital management holds an important place among financial management decisions. Firms’ keeping working continuously in the long term depends on investments on working capital. The optimal level of working capital for a firm can be provided when there is a balance between profitability and liquidity. The aim of this study is to examine the effect of cash conversion cycle which is used to evaluate the effectiveness of working capital management on profitability of firms. With this aim, data set between 2009 and 2013 from 19 firms in Gümüşhane city in Turkey working in the fields of fruit leather and churchkhela production have been used. According to the results of panel data analysis results, there is a positive effect of cash conversion cycle on profitability of firms.