IMPACTS OF WORKING CAPITAL MANAGEMENT ON FIRMS PROFITABILITY; (THE CASE OF HAWASSA CITY MANUFACTURING ENTERPRISES)

The purpose of this study is to investigate the impact of working capital management on firms’<br> profitability. In light of this objective the study adopted quantitative method of research approaches<br> to test a series research hypothesis. Specifically, the study used survey of documentary analysis of<br> companies’ audited financial statements. Purposive sampling design was employed based on their<br> ages and reliable document information. Consequently, the study selected a sample of sixteen (16)<br> companies out of total population 64 manufacturing enterprises for the period of six years (2015-<br> 2020) with the total of 64 observations. Data was then analyzed using Pearson’s correlation and<br> OLS regression analysis. The results showed that there is statistical significance negative<br> relationship between profitability and cash conversion cycle. The researcher found that there is a<br> significant negative relationship between average payable period and profitability. Moreover the<br> study finds that there is strongly significance positive relationship between average collection period<br> with firm profitability and liquidity shown mixed positive and negative relationship with<br> profitability. To fix these gap managers of Hawassa city manufacturing enterprises should use<br> conservative working capital policy. This helps to minimize bad debit and liquidation risks and<br> increase profitability. Finally, to keep going concern of the business that is one of the GAAPs’<br> principle, Hawassa manufacturing enterprises should set platform to minimize their CCC to realize<br> firms’ profitability through managing WC efficiently and effectively