Size and Profitability of Enterprises in the Czech Republic in Relation to Working Capital Management

Abstract

: The article is focused on the size and profitability of companies in the Czech Republic in relation to working capital management. The aim of the article is to find out whether and to what extent working capital and working capital management influence the size of companies and the profitability of companies operating in the manufacturing industry and the wholesale and retail sector. The generalized method of moments (GMM method) will be used to determine the goal of the article. Annual data for the period 2008 to 2021 of companies operating according to the CZ-NACE classification in the manufacturing industry and the retail and wholesale trade sectors will be included in the research. Using the GMM method, a statistically significant relationship between working capital management on the one hand and the profitability and size of companies on the other hand was demonstrated. Cash conversion cycle, current assets, short-term liabilities and working capital have an impact on the size and profitability of businesses in the Czech Republic.