Environmental Sustainability Disclosure and Nigerian Economic Growth Rate (1990-2024)

Working capital management is central to manufacturing firms because production continuity depends on the timely conversion of inventories and trade receivables into cash while maintaining credible payment arrangements with suppliers. Yet the profitability implications of working capital decisions are not uniform: excessively large current-asset investments can tie up funds, whereas excessively restrictive policies can disrupt production, weaken customer relationships and increase operating risk. This article examines the relationship between working capital management and profitability of listed manufacturing companies in Italy, with particular attention to the moderating effect of financial risk management. It adopts an integrative literature review and conceptual-analysis approach, drawing on foundational working capital studies, research on the cash conversion cycle, corporate financial risk management and publicly available evidence on the risk exposures disclosed by Italian industrial groups. The analysis integrates the cash conversion cycle perspective with the trade-off view of working capital investment and enterprise risk management. It argues that the profitability effect of working capital efficiency depends partly on how effectively firms identify, measure and mitigate liquidity, credit, interest-rate, foreign-exchange and commodity-price risks. Strong financial risk management is expected to strengthen the beneficial effect of disciplined working capital practices by reducing cash-flow volatility, improving funding resilience and supporting informed decisions about receivables, inventory and payables. Conversely, weak risk controls may undermine the gains from shorter operating cycles. The article develops an integrated conceptual framework and six testable propositions for future empirical investigation using panel data from firms listed on Euronext Milan. It contributes a context-sensitive explanation of why working capital management and financial risk management should be considered jointly when assessing manufacturing profitability.