The Impact of Working Capital on Profitability in the Business

Working capital is one of the most important issues in the field of accounting and financial management, because this greatly affects the profitability and the risk of the company and sometimes the continuity of its activity. Applying proper management of working capital and preventing loss of cash and inventory resources will improve performance and profitability, thus creating value in the company. In this study, the effect of various components of working capital, such as inventory conversion cycle and cash flow dynamics, has been tested in most of the four main hypotheses in in Tehran Stock Exchange over the years 2001 to 2015, to examine the effect of capital investment And its components. To test the hypotheses, the correlation analysis between dependent variable and independent variables and modeling based on multiple regression models has been used. The results of the research indicate that there is a meaningful relationship between the components of working capital and profitability.