Investigating the relationship between working capital and cash flow on the performance and value of small and medium enterprises

Document Type : Original Article

Authors

Naserkhosro University, Iran

Abstract

Managing working capital is very important in small to medium enterprises because of large portion of the overall organization's capital. That is due to current assets and liabilities include items that play a direct role in the company's operating cycle. Therefore, based on this argument, the purpose of this study is to investigate the effect of working capital and cash flow on the value of small and medium enterprises. The present study is empirical research in terms of classification of research based on purpose; In terms of research methodology, it is a descriptive correlational research based on regression analysis using data panel. Also, in the present study, historical information is used to test the hypotheses, so the design of this research is a quasi-experimental (post-event) research. In this study, information about 29 sample companies in an 8-year period between 2011-2018 (a total of 232 observation) was analysed to examine the relationship between variables to test the research hypothesis. Based on the results of the present study, working capital and cash flow affect the value of small and medium enterprises. In other words, the present study showed that working capital management and optimal and efficient use of current assets and liabilities, will have a positive impact on performance and increase the value of small and medium enterprises.

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Main Subjects

New Applied Studies in Management, Economics & Accounting
Volume 3, Issue 4
December 2020
Pages 84-102

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History

  • Receive Date: 26 September 2020
  • Revise Date: 20 October 2020
  • Accept Date: 16 November 2020

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