Is firms’ profitability affected by working capital management? A novel market-based evidence in Jordan

Figures & data

Figure 1. Research framework.

Table 1. Variables’ measurement

Variables	Acronym	Measurement
Dependent Variable
Profitability	ROA	Net income to total assets
Independent
Working capital management	CCC	Receivable days+ Inventory days- Payable days
Receivable days	RD	((Account receivables)/(annual sales)) * 365
Inventory days	ID	(Inventory/ cost of sales) *365
Payable days	PD	(Accounts payable/ purchases) *365
Control Variable
Leverage	LV	Total liabilities to total assets
Firm size	FSIZE	Total assets’ natural logarithm

Table 2. Model 1 empirical results

ROAit = α + δi +β1RDit + β2IDit + β3PDit + β2LVit + β3FSIZEit+ εit
Variables	Β	T	P>|t|
RD	−0.056	−3.950	0.008***
ID	−0.013	−2.100	0.081*
PD	−0.004	−0.570	0.592
LV	−15.444	−4.980	0.003**
FSIZE	2.307	0.340	0.746
Constant	0.889	2.620	0.049**
R^2 = 0.3848		F = 1001.44***

Notes: Significance level *** 1%, ** 5% and * 10%

Table 3. Model 2 empirical endings

ROAit = α + δi +β1CCCit + β2LVit + β3FSIZE it+ εt
Variables	Β	T	P>|t|
CCC	−0.123	−4.390	0.005***
LV	−21.578	−10.060	0.000***
Log Size	−5.291	−1.030	0.342
Constant	54.130	4.440	0.004***
R^2 = 0.2671		F = 74.63***

Notes: Significance level *** 1%, ** 5% and * 10%