PECULIARITIES OF WORKING CAPITAL MANAGEMENT IN LITHUANIAN MANUFACTURING COMPANIES
DOI:
https://doi.org/10.15544/ssaf.2020.04Abstract
The aim of this study is to investigate the working capital management policies used by Lithuanian manufacturing companies, their specific features in particular industries, trends of alterations in these policies due to changes in the economic environment, as well as to assess relationship between the efficiency of working capital management and profitability.
The research includes companies of the largest Lithuanian manufacturing branches. The research period is 2004–2018. We used cash conversion cycle, working capital investment policy ratio, working capital financing policy ratio, and the ratio of working capital financing by short-term bank loan for the analysis of working capital management efficiency. To achieve the aim and objectives of the study, a comparative analysis of indicators and correlation analysis using Pearson correlation coefficient are used.
Separate branches of Lithuanian manufacturing industries apply different working capital investment policies. Until 2010, most industries have been used an aggressive working capital investment policy; a conservative working capital investment policy was characteristic to only two branches: the manufacture of wearing apparel as well as the repair and installation of machinery and equipment. However over the last decade, increasing number of manufacturing industries have enhanced conservatism of working capital investment policy and differences among industries in this field are narrowing. Lithuanian manufacturing companies applied a conservative working capital financing policy and it remained relatively stable, regardless of the changing economic environment.
We did not observe any statistically significant relationship between the cash conversion cycle and profitability indicators of Lithuanian manufacturing companies. However, a weak positive relationship was found between the working capital investment policy ratio and the return on assets as well as return on equity. The weak negative relationship was found between the ratio of working capital financing by short-term bank loan and all profitability indicators.
Keywords: working capital management, cash conversion cycle, profitability, manufacturing companies.
JEL codes: G31, G32, L25.
Downloads
Published
Issue
Section
License
Copyright (c) 2020 Science and Studies of Accounting and Finance: Problems and Perspectives

This work is licensed under a Creative Commons Attribution-NonCommercial 3.0 Unported License.
All articles published in Science and Studies of Accounting and Finance: Problems and Perspectives are under the Creative Commons Attribution-NonCommercial 3.0 Unported license, allowing third parties to share their work (copy, distribute, transmit) and to adapt it, under the condition that the authors are given credit, that the work is not used for commercial purposes, and that in the event of reuse or distribution, the terms of this license are made clear.
Authors retain copyright of their work, with first publication rights granted to Vytautas Magnus University Agriculture Academy. However, authors are required to transfer copyrights associated with commercial use to the Publisher.
Authors are permitted and encouraged to post items submitted to this journal on personal or institutional websites, prior to and after publication (while providing the bibliographic details of that publication).