<abstract xmlns="http://www.w3.org/1999/xhtml"><p> The idea that working capital management impacts profitability and risk of a company is generally accepted and in last 10-15 years has acquired a substantial interest. Accordingly, from the aspect of the measure of efficiency of working capital management, the objective of this paper is to evaluate working capital management impact on profitability of Croatian software companies. This impact was examined using descriptive and correlation as well as panel regression analysis for six-year period (2008-2013). The results show that after controlling for characteristics of the company and macroeconomic conditions working capital management significantly affects the profitability of Croatian software firms. Moreover, the results imply the existence of a nonlinear, concave quadratic relationship between the net working capital and return on assets. This suggest the existence of an optimal level of net working capital that balances costs and benefits and maximizes profitability of analysed companies.</p></abstract>

The idea that working capital management impacts profitability and risk of a company is generally accepted and in last 10-15 years has acquired a substantial interest. Accordingly, from the aspect of the measure of efficiency of working capital management, the objective of this paper is to evaluate working capital management impact on profitability of Croatian software companies. This impact was examined using descriptive and correlation as well as panel regression analysis for six-year period (2008-2013). The results show that after controlling for characteristics of the company and macroeconomic conditions working capital management significantly affects the profitability of Croatian software firms. Moreover, the results imply the existence of a nonlinear, concave quadratic relationship between the net working capital and return on assets. This suggest the existence of an optimal level of net working capital that balances costs and benefits and maximizes profitability of analysed companies.

The Impact of Working Capital Management on Profitability of Croatian Software Companies

Zagreb International Review of Economics and Business

This work is licensed under the Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 License.

The idea that working capital management impacts profitability and risk of a company is generally accepted and in last 10-15 years has acquired a substantial...

The Impact of Working Capital Management on Profitability of Croatian Software Companies

Published Online: Jul 03, 2018

Page range: 47 - 66

DOI: https://doi.org/10.2478/zireb-2018-0007

Keywords
working capital management, net working capital, company’s profitability, return on assets, Croatian software companies

© 2018 Dina Korent, published by Sciendo

This work is licensed under the Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 License.

The Impact of Working Capital Management on Profitability of Croatian Software Companies

Published Online: Jul 03, 2018

Page range: 47 - 66

DOI: https://doi.org/10.2478/zireb-2018-0007

Keywordsworking capital management, net working capital, company’s profitability, return on assets, Croatian software companies

© 2018 Dina Korent, published by Sciendo

This work is licensed under the Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 License.

Keywords
working capital management, net working capital, company’s profitability, return on assets, Croatian software companies