Published May 5, 2023 | Version https://www.theijbmt.com/archive/0951/1381824384.pdf
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Impact of Net Working Capital Management on Profitability: Evidence from Vietnam Energy Sector

Authors/Creators

  • 1. Faculty of Accounting and Auditing, Industrial University of Ho Chi Minh City

Description

This study examines the impact of net working capital (NWC) management on the profitability of 26 energy companies listed on the Vietnamese stock exchange for the period from 2012 to 2021. The author uses annual panel data, and the Feasible Generalized Least Squares (FGLS) method is subsequently conducted to deal with the phenomena of heteroscedasticity and autocorrelation. Regression results from the FGLS method show that Day sales outstanding (DSO), Day inventory outstanding (DIO), and the Cash convention cycle (CCC) have statistically significant negative impacts on profitability (ROE). The number of days payable outstanding (DPO) has a statistically significant positive impact on profitability (ROE). In contrast, the current ratio (CR) does not. According to the findings of this study, energy companies should apply an optimal and efficient method for managing the factors that negatively impact profits in net working capital management to generate high business profits.

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References

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