INTERNAL AND EXTERNAL DETERMINANTS OF PROFITABILITY AND THE MEDIATING ROLE OF WORKING CAPITAL MANAGEMENT: EVIDENCE FROM EGYPTIAN NON-FINANCIAL COMPANIES LISTED ON THE EGX

This study examines how internal firm-specific factors and external macroeconomic conditions shape profitability among Egyptian non-financial companies listed on the Egyptian Exchange, with particular attention to the mediating role of working capital management. Drawing on secondary financial and macroeconomic data represented in 798 firm-year observations, researcher applies descriptive statistics, regression diagnostics, multiple regression analysis, and bootstrap-based mediation analysis. Profitability is assessed using return on assets and return on equity, while internal factors include firm size, leverage, net profit margin, total debt, and liquidity, and external factors include inflation, reserves, deposit interest rates, GDP growth, and population growth. The findings show that internal factors are more powerful predictors of profitability than macroeconomic variables. Firm size significantly improves ROA and ROE, while leverage strengthens ROE and working capital management. Working capital management has a strong direct association with profitability and mediates the internal factors-profitability relationship, showing competitive partial mediation for ROA and full mediation for ROE. By contrast, external macroeconomic factors show weak mediation effects. Analyses of sectoral and economic-condition indicate that mediation is strongest in the industrial sector and during periods of economic instability. The evidence provides practical guidance for decision-makers.