TRENDS IN WORKING CAPITAL MANAGEMENT AND ITS IMPACT ON FIRMS’ PERFORMANCE: AN ANALYSIS OF F&B FIRMS LISTED ON VIETNAM STOCK MARKET

Abstract

The research investigates the trends in working capital management and its impact on firms’ performance: an analysis of F & B firms listed on Vietnam Stock Market 2010 to 2020. With a sample of 42 F&B companies listed ^on Hanoi Stock Exchange (HNX) and Ho Chi Minh City Stock Exchange(HOSE), the authors choose to follow the research models used by Sharma and Kumar (2011) and use the quantitative method with OLS regression and model testings to process the study. However, contradicting the result observed by Sharma and Kumar (2011) and some other studies in different countries, our research outcome shows the negative and statistically significant impact of WCM on firm performance. Particularly, the cash conversion cycle (CCC), a comprehensive measure of WCM, and its components, namely accounts receivable days, accounts payable days, and inventory days, significantly and negatively affect firm performance measured by return on assets (ROA). Thus, the research opens up new insight into the relationship between WCM and firm performance for business administrators of F&B firms in Vietnam to take it into consideration and improve their business management strategies.