JEFMS Journal

ABSTRACT:

The purpose of this study is to investigate the impact of net working capital management (NWCM) on profitability for 29 energy companies listed on the Ho Chi Minh Stock Exchange (HOSE) and Hanoi Stock Exchange (HNX), using panel data for six years from 2016 to 2021. The author conducts regression analysis with panel data; Feasible Generalized Least Squares (FGLS) method is subsequently undertaken to deal with the phenomena of heteroscedasticity and autocorrelation. Regression results from the FGLS method show that four components of working capital, including Days payable outstanding (DPO), Days sales outstanding (DSO), have statistically significant negative effects on profit figures (using ROS metric), Cash conversion cycle (CCC) has a statistically significant positive impact on profitable (ROS). But the research results show that there has no relationship between the number of days of inventory outstanding (DIO), Current Ratio (CR), the profitability (ROS). Based on the results, the author reconfirms the relationship between net working capital management and profitability, as well as provides energy trading companies in Vietnam with solutions to NWCM effectively in order to enhance firms’ value, especially in such an uncertain economic condition that is easily vulnerable to war or pandemic.

KEYWORDS:

Net working capital management, Profitability, Return on assets, Energy Business Companies, FGLS

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