Does Working Capital Management Influence the Performance of Wholesale and Property Industry in Malaysia

AUTHOR(S):

Hui-Shan Lee, Wai-Mun Har, Taw-Onn Yow, Sin-Yee Lee, Kee-Chuan Sim

TITLE

Does Working Capital Management Influence the Performance of Wholesale and Property Industry in Malaysia

ABSTRACT

This study provides the impact of working capital management (WCM) on the performance of public listed wholesale & retail industry and property industry in Malaysia from 2002 to 2011. Regression model is employed by using two measures of firm’s performance namely Return on Assets, ROA (proxy to measure the firm’s profitability) and Tobin’s Q, TQ (proxy to measure the firm’s market value) as the dependant variables. WCM components include Current Assets to Total Assets Ratio (CATAR) and Current Liabilities to Total Assets Ratio (CLTAR) with three control variables which consist of Firm Size (SIZE), Sales Growth (SLGR) and Financial Leverage (LEV) are used as the independent variables. The results to a very large extent indicate that CATAR and SIZE have significant positive impact on the firm’s performance. It suggests that wholesale & retail industry and property industry in Malaysia should pursue conservative investment policy by having high level of short term investment in order to make profit and create value for their shareholders. It also reveals that the larger the firms are, the more profitable they are; recommending the firms shall expand their business to achieve higher profit and accomplish shareholder wealth maximisation.

KEYWORDS

Working capital management, return on assets, Tobin’s Q, current assets to total assets ratio, firm size.

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Cite this paper

Hui-Shan Lee, Wai-Mun Har, Taw-Onn Yow, Sin-Yee Lee, Kee-Chuan Sim. (2016) Does Working Capital Management Influence the Performance of Wholesale and Property Industry in Malaysia. International Journal of Economics and Management Systems, 1, 1-14