24. Working Capital Management in Relation to the Size and Profitability of Companies in the Czech Republic

The aim of this article is to find out how working capital and its management affect the size of companies and the profitability of companies operating in the manufacturing industry and wholesale and retail trade sector in the Czech Republic. In order to fulfill the aim of the article, the method of comparison and the generalized method of moments (GMM method) will be used. The data sample will include data for the period 2009 to 2019. The analysis will include companies operating according to the CZ-NACE classification in the manufacturing industry, wholesale, and retail trade sector in the Czech Republic. The data sample contained 3645 companies operating in the manufacturing industry and 5257 companies operating in the wholesale and retail trade sector. Using the comparison method and the GMM method a statistically significant relationship was found between working capital management and profitability and size of companies. It was found that variables such as cash conversion cycle, current assets ratio, current liabilities ratio, and working capital ratio affect the profitability of companies and the size of companies in the manufacturing industry and the wholesale and retail trade sector in the Czech Republic.