INVESTIGATING THE FACTORS INFLUENCING WORKING CAPITAL AND PROFITABILITY IN CHILEAN SMES: A STATISTICAL ANALYSIS

Authors

  • Santiago Chalmers Department of Management and Innovation Systems, University of Salerno

Keywords:

working capital, profitability, manufacturing companies, Chile, non-linear trend, financial difficulties

Abstract

This study investigates the relationship between working capital and profitability of Chilean
companies. A sample of manufacturing companies from the metropolitan region of Santiago was selected for
the survey. The data covered five years to allow a sufficiently significant observation time horizon. The
generalised least squares method was used to develop the analysis to obtain more reliable results. The
empirical results suggest that the relationship between the single elements of working capital and firms'
profitability presents a non-linear trend, confirming the results obtained in previous research. Therefore, for
Chilean manufacturing companies, it is worth investing in the individual elements of working capital until the
optimal size is reached, as the investment positively impacts profitability. After exceeding the optimal
threshold, the ratio reverses, increasing the risks of financial difficulties.

Published

2022-07-11

How to Cite

Santiago , C. (2022). INVESTIGATING THE FACTORS INFLUENCING WORKING CAPITAL AND PROFITABILITY IN CHILEAN SMES: A STATISTICAL ANALYSIS. American Interdisciplinary Journal of Business and Economics (AIJBE), 9(3), 1–9. Retrieved from https://sadijournals.org/index.php/AIJBE/article/view/56

Issue

Vol. 9 No. 3 (2022): July-Sept. 2022

Section

Original Peer Reviewed Articles
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