Impact of Working Capital Management of Czech Companies on Their Performance

Abstract

The amount of current assets and the structure of their financing within working capital management define the level of risk, liquidity and profitability of any company. This chapter identifies the type of working capital investment and financing policies and reveals their influence on the financial performance of Czech firms.

The type of investment policy was defined, based on the structure of current assets and the working capital-to-sales ratio, followed by the share of different liabilities in assets, used to determine the financing policy. The Orbis database provided the chapter with indexes of manufacturing, agricultural, construction and trade companies for the period of 2012–2021.

The results obtained revealed the liquidity and financial independence of all selected industries. Flexible investment and conservative financing policies in agriculture were accompanied by low profitability. The decrease of the working capital-to-sales ratio and the attraction of the current debts for assets financing provided a higher return on assets in the manufacturing, agricultural and trade sectors.

Citation

Skupieňová, M., Konieva, T. and Koštuříková, I. (2024), "Impact of Working Capital Management of Czech Companies on Their Performance", Stavárek, D. and Tvrdoň, M. (Ed.) Modeling Economic Growth in Contemporary Czechia (Entrepreneurship and Global Economic Growth), Emerald Publishing Limited, Leeds, pp. 299-313. https://doi.org/10.1108/978-1-83753-840-920241019