Working capital management in chemical industry: An Empirical research on listed companies at Borsa İstanbul

Working capital refers to the short-term investments used to sustain the operations of the enterprises. The main objective of the enterprises is to make profit. Working capital management holds an importance place in financial management of companies. The aim of this study is to investigate the effect of working capital management on firm profitability in chemical industry. In this study, panel data analysis method was conducted for a data set of 31 companies in the chemical, petroleum, rubber and plastic products sector, which were traded on the BIST between 2009-2018. In the research, return on asset is considered as a dependent variable. Independent variables of the research are cash conversion days, leverage ratio, current ratio, investment in tangible fixed assets and firm size. The findings suggest that leverage ratio and current ratio have a significant and negative relationship with return on assets, whereas firm size has a positive relationship with return on assets. Cash conversion days and investment in tangible fixed assets are found to be statistically insignificant. Therefore, we result that working capital has no positive relationship with profitability in the case of chemical industry.