Impact of Aggressive Working Capital Management Policy on Firm’s Financial Performance

Taqwa Bint Mohammed Bin Mahmood Al-Mamari, Noor Bint Salim Bin Mohammed Bin Obaid Al Sulaitni, Shika Ali Rashid Al Fazari, Maiya Bint Salim Bin Mohammed Bin Said Al Aufi, Atheer Abdullah Sulaiman Al Zaabi, Iman Sulaiman Al. Maktoumi

Abstract

The current study looks at the long-standing link between working capital management policies and a company's profitability. Using the panel data set for the time, the impact of aggressive working capital investment and financing strategies was examined. The data for study variables are taken from the Muscat security market, we identified 13 non-financial companies that provide industrial services from 1998 to 2005. Results show that managers that are cautious with their working capital investment and finance policies can provide value to their businesses. Investors value stocks of companies that take an active approach to address their short-term liabilities. Such results posit new evidence and have implications for corporate working capital management.