Working Capital Management and the Profitability of Local and Foreign Non-Financial Firms Listed on the Ghana Stock Exchange (GSE).

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Zigah Selorm, Alhassan Ndekugri

Abstract

This research investigated the relationship between working capital management and firm profitability in Ghana using data on Ghana Stock Exchange (GSE) listed non-financial firms and comparing the results for local and foreign firms. The study used the fixed effects technique to estimate a model on a panel of eighteen firms from 2003 to 2016. The study found a positive relationship between Accounts Payable Period (APP) and Return on Assets (ROA) for all samples, that is, the full sample and the local and foreign sub-samples. This relationship was however only significant for the foreign sample. The relationship between Inventory Conversion Period (ICP) and ROA was found to be negative for all samples. These relationships were not statistically significant. The results for Receivable Collection Period (RCP) differed from one sample to another. While it was positive in the foreign and local samples, it was negative in the full sample. It was however statistically significant only in the local sample. Finally, the results also showed that Cash Conversion Cycle (CCC) has a negative relationship with ROA for all samples.

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How to Cite
Zigah Selorm, Alhassan Ndekugri. (2024). Working Capital Management and the Profitability of Local and Foreign Non-Financial Firms Listed on the Ghana Stock Exchange (GSE). European Economic Letters (EEL), 14(2), 784–796. Retrieved from https://www.eelet.org.uk/index.php/journal/article/view/1403
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