Impact of working capital management on financial performance: An application on companies operating in the Borsa Istanbul 100 index

Companies need to maintain profitability and their presence in the market to exist. But this is possible with working capital management. Working capital management covers investment in rotating assets and financing of these assets. The working capital policy determines the amount of working capital to rotating assets and with which resources it is funded. Working capital policies can also affect the profitability, value, risk and even liquidity of the firm. In this way, it also guides investors who study risk and profitability from the point of view of the firm's managers, who deal with the firm's performance. In the studies, it also refers to how effectively the financial performance factor representing profitability is used in the financial situation of firms. In this study, it was aimed to reveal the effect of working capital management on financial performance by using the data of companies traded in the BIST 100 index. BIST 100 index was examined by panel data analysis method using data from 28 annual periods of 16 companies that traded continuously between 2005-2018. Investment and financing policies of working capital determined independent variables, while return on asset and return on equity, which are indicators of financial performance, are determined as dependent variables. As a result of the study, while determining positive relationship between working capital return on asset and return on equity and investment policy; a significant and negative relationship between financing policies and return on asset, and a significant relationship between financing policy and return on equity could not be determined.