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Abstract
The reason for this study is to examine the effect of working capital optimization on the efficiency of Iraqi companies across various industries. The study uses least square model and panel data used for four industries. The analysis gives empirical confirmation that cash conversion cycle used as a proxy of working capital and impact significantly and negatively impact on profitability of the firm and also firm level control factor age and industry influence on the firm performance. Such results indicate that administration can improve organizational profitability by reducing its working capital. The findings of this study can be examined in various socio-economic and industrial contexts. This research is limited to the Iraqi context. This research applies the existing body of information to investigate a panel data set in the context of a developing economy by using the regression equation. This innovative research explores empirically the effect of working capital management on the performance.
Keywords
Working Capital Optimization, Cash Conversion Cycle, Performance, Iraq.
Introduction
Supply chain management (SCM) is the partnership between business partners manufacturers and manufacturers of essential raw materials, producers, distributors, transporters, retailers, banks and financial institutions, etc. the main definition is connected by products, information and finance flows (Kouvelis., Chambers., & Wang., 2006). The management of the upstream cash flow is as important as management of downstream product flows in order to ensure an efficient supply chain network. "From this point of view, working capital management (WCM) as an integral component of management of the financial supplier chain (FSCM) has attracted considerable interest as it is a way to speed up work capital (WC) time-cycles and to increase the profitability of the company (Gupta., Dutta., 2010). For these reasons, the importance of effective WCM, particularly in emerging market SCs, has dramatically increased with difficulties in access to capital, limited financial infrastructure and, in the first place, legal, regulatory and accounting uncertainties (Deloof., 2003).
The increased volatility in financial-crises market conditions increased competition among organizations in the last decade. Organizations are searching for ways to improve their profitability and stay competitive on the market. There is never a normal way to finance operations through loans and advances. After the financial crisis, the financial situation forced companies to find ways to finance their...