Correlation analysis of profitability and working capital of small and medium-sized manufacturing industries in China based on GMM research method

Abstract

Manufacturing is very important for the prosperity and development of all countries. Almost all countries have made progress in manufacturing. In recent years, Chinese manufacturing enterprises, especially small and medium-sized manufacturing enterprises, have developed rapidly. This is because the healthy development of small and medium-sized manufacturing enterprises is of great significance in promoting China's economy to achieve high-quality development and move forward steadily, no matter from the perspective of status and function or from the perspective of actual contribution. Based on the financial data of new over-the-counter market from 2015 to 2019, this paper uses GMM research method to analyze the profitability of China's small and medium-sized manufacturing industry, and makes an empirical analysis of its profitability and working capital. The results show that the relationship between working capital management level and profitability is not linear, but inverted U-shaped. The study further finds that the working capital turnover speed and the investment and financing policies adopted by enterprises have an impact on the profitability of small and medium-sized manufacturing enterprises. Finally, this paper discusses the measures to improve the profitability of small and medium-sized manufacturing enterprises.