The relationship between working capital management and performance of a firm in manufacturing firms

There is a wide range of academic studies on working capital which can influence all operations of firms and which is crucial in this respect. In this study, it is aimed to examine the effects of working capital on both operational performance and financial performance by determining the variables that affect working capital of manufacturing industry firms that are listed in the Stock Exchange Istanbul (BIST). Panel Data Analysis was used in the study of working capital determinants and the relationship between working capital and financial performance and Data Enveloping Analysis and Malmquist Total Factor Productivity Index method was used in the study of efficiency and total factor productivity reflecting operational performance, Logistic Regression Analysis in the study of the relationship between working capital and operational performance. As a result; it was found that a statistically significant positive relationship between working capital ratio and cash conversion cycle, asset profitability, equity profitability; a statistically significant negative relationship between working capital and financing expense/net sales, fixed assets/asset total, stock/current assets ratio. It was observed that a statistically significant positive relationship between profitability and current ratio, current assets/assets total; a statistically significant negative relationship between profitability and debt/equity ratio. During the examination period, only 6 firms of 112 operate relative effectively and in general, the number of firms with a declining return is quite high. In additional, productivity increasing from efficiency that increase due to improvement in pure technical efficiency has been detected. It was detected in Logistic Regression Analysis that a unit increase in the current rate increases the likelihood of firms being effective by 1.5 and a unit increase in net sales growth increases the probability of firms being effective by 4.3 times.