A RESEARCH ON THE EFFECTS OF WORKING CAPITAL ELEMENTS ON PROFITABILITY ON TEXTILE, CLOTHING AND LEATHER COMPANIES TRADED ON BORSA ISTANBUL

Abstract

The aim of this study is to examine the effects of working capital components on the profitability of businesses. In this framework, the financial ratios of 22 companies operating in the textile, clothing and leather sectors traded in Borsa Istanbul between 2013 and 2022 were calculated. Independent variables in the study; current ratio, financial leverage, account receivables period, inventory conversion period, account payable period, cash conversion cycle ratios are taken. The dependent variables are return on assets and return on equity. In the research, a model of established for each dependent variable and panel data analysis was used. According to the results of analysis, it has beeen determined that the current ratio variable has a positive and significant effect on the return on assets and return on equity of the relevant companies, while the financial leverage, account receivables period and cash conversion cycle variables have a negative significant effect. In term of coefficient sizes of the variables, the most effective variables on return on assets were current ratio and financial leverage, while account payable period and cash conversion cycle variables were on on return on equity.