The Impact of the Working Capital Management on Firm Profitability in the Romanian Manufacturing Industry

The purpose of this study is to examine the relationship between the working capital management and corporate profitability for the companies from manufacturing industry listed on the Bucharest Stock Exchange for a period of five years from 2011 to 2015. This paper reveals that there is a negative relationship between profitability, measured through return on assets, and cash conversion cycles. The negative association assumes that, when the cash conversion cycle increases, the profitability of the firm decreases. Thereby, managers can increase the profitability of their companies reasonably, by handling correctly the cash conversion cycle and by keeping its components at an optimal level.