IMPACT OF WORKING CAPITAL MANAGEMENT ON CORPORATE PROFITABILITY DURING NONCRISIS AND CRISIS TIMES - Evidence from German public listed companies

The present master thesis investigates the impact of Working Capital Management (WCM) on corporate profitability for non-crisis and crisis years. A sample of 23 public listed German companies from the German stock exchange (DAX) in Frankfurt for the years 2007-2016 is used in the analysis. For the crisis period, the years 2008 and 2009, representing the Financial Crisis, and the years 2012 and 2013, representing the Euro Crisis, have been identified. The comparison of the two opposite overall conditions of an economy are used to determine changes on the impact of WCM on profitability – consequently companies can enhance their profitability by aligning their WCM policies on the economy. The results of the analysis deliver no significant impact of the WCM on profitability; therefore, no reliable conclusion can be drawn. What can be stated as an assumption is that the data indicate a positive impact of the Cash Conversion Cycle (CCC) on companies Return on Assets (ROA) for both periods. As a consequence, it could be the case that companies do not need to change their WCM when the company enters a state of crisis or upswing. This can be explained by the positive effect of a generous trade policy on the sales and the prevention of stock-outs in high demanding times due to high inventories. The relatively lower number of payables benefit the profitability as well by the usage of trade discounts and the high reputation, which is connected to an early payment