Impact of working capital on textile sector’s profitability”

Abstract

This paper aims to investigate the impact of working capital on profitability of Vietnamese textile firms in the period of 2009 – 2013. This research was done by using multi-regression model to analyze yearly data of 12 textile companies which were collected from audited financial statements. Particularly, the multi-regression model was applied between dependent variable measured by Gross Operating Profit and independent variables represented by Cash Conversion Cycle, Days Sales Outstanding, and Days Sales in Inventory, Days Payable Outstanding, Current Ratio, Debt Ratio and Sales Growth Rate. Afterwards, detection tests have been done in order to check the credibility of the results. By using Eview 7.2 software to analyze data, CCC, DSO, DSI and DR negatively related to GOP while DPO, CR and SGR have positive impacts on GOP. Finally, detection tests namely multicollineary, autocorrelation and Heteroskedasticity have proven that there is no such an error that distorts and fakes the results.