Working capital management and profitability: Comparison study of One Belt One Road

Abstract

Working Capital Management is an important concept when it occurs in firms’ profitability. In this paper, the impacts of Working Capital Management on firms’ profitability are investigated with the scope of Chinese Listed Transportation Equipment Companies before and after the OBOR policy. To do the research, secondary data are used to do regression and correlation analysis. WCM is represented by the current ratio, quick ratio, inventory turnover ratio, cash conversion cycle, firm size, and financial debt ratio, while profitability measures are return on assets and return on equity. Findings show that CR, ITR, CCC, and FS have negative impacts on profitability, while QR and FDR have positive impacts on profitability. With the findings, management can make better decisions to maximize profitability by properly lowering CR, ITR, CCC, and FS, or increasing QR and FDR.