engleski

Impact of working capital management on profitability in Croatian processing industry

Working capital management plays an essential role in the operational execution of a financial strategy. It ensures that a company has sufficient cash to meet its short-term obligations. Companies with sound working capital policies efficiently execute operational, financial decisions, leading to better financial performance and, consequently, better profitability. This study’s primary purpose is to investigate the impact of working capital management on financial performance and profitability in the Croatian processing industry. The research was performed by calculating financial ratios based on a selected sample of companies’ annual financial statements. The selection of samples was based on a companies’ size. The monitoring period was three years, which should be long enough to monitor used ratio trends. Used financial ratios were related to operating efficiency, financial leverage, liquidity, and profitability. Financial ratios and their components answered questions about financial performance and evaluated working capital management and profitability. The presented analysis could be further investigated and broadened depending on users’ needs.

Working capital management, financial ratios

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