Effect of the working capital on profitability: A study on the companies in the BIST

In this study, in order to investigate the effect of working capital on profitability, 78 firms whose data were able to be accessed were considered the sample among a population composed of 209 manufacturing firms, and financial ratios were utilized. Return on assets(ROA), operating profit margin(OPM), net profit margin(NPM), and return on equity(ROE) were dependent variables. Financial leverage(FL), receivables turnover(RT), stock turnover(ST), accounts payable turnover(APT), and current ratio(CR) were independent variables. Firm size was control variable and it was calculated by dividing the total assets of each company by the sum of the total assets of 78 companies in the study and, in order to make it a percentage, multiplying it by 100. Data were obtained from Public Disclosure Platform and Finnet. Within the scope of the study, the annual data of 78 companies whose shares are traded on Borsa İstanbul were utilized between 2010 and 2021. In order to perform the required analyses R programming language was utilized. Panel data analyses were conducted with the help of R language. Fixed effects model(FEM), pooling model(PM), and random effects model(REM) were formed for each dependent variable. Then, these models compared with the help of F-Test, Lagrange Multiplier Test, and Hausman Test. By this method, the most suitable model was selected for each dependent variable. In conclusion, a significant and positive relationship between ROA and RT, APT, CR, and FS, and a significant and negative relationship between ROA and FL were found. A significant and positive relationship between OPM and CR, and FS, and a significant and negative relationship between OPM and ST, and FL were found. A significant and positive relationship between NPM and CR, and FS, and a significant and negative relationship between NPM and FL were found. A significant and positive relationship between ROE and CR, APT and FS, and a significant and negative relationship between ROE and FL were found. Keywords: Working capital, Profitability, Borsa İstanbul, Panel data analysis