WORKING CAPITAL MANAGEMENT AND FINANCIAL PERFORMANCE: EVIDENCE FROM ALTERNATIVE ENERGY FIRMS IN THE UK
DOI:
https://doi.org/10.26668/businessreview/2024.v9i4.4435Keywords:
Working Capital Management, Financial Performance, Alternative Energy, UKAbstract
Purpose: This study examined the impact of working capital management on the financial performance of alternative energy in the UK from 2015 to 2022. The proxy used includes receivable turnover, payable turnover, inventory turnover and return on asset. The study employs an ex-post facto research design using panel data from the sampled firms' annual reports.
Methodology: The panel data were analysed using descriptive statistics, correlation matrix and panel regression analysis. The Hausman specification test showed that the fixed effect was more appropriate.
Findings and Conclusion: The findings show that receivable turnover has a significant positive impact on the return on assets of the alternative firm in the UK. In addition, payable turnover has a significant negative effect on return on assets, while the findings on inventory turnover have an insignificant impact on return on assets. These findings imply that working capital management significantly affects the financial performance of alternative energy firms in the UK. Based on the conclusion, the study recommends that oil and gas firms increase their net cash flow from operating activities to increase their financial performance.
Originality/Value: Globally, it is acknowledged that many companies fail due to poor working capital management. This study contributes to knowledge by examining the effect of working capital management on the financial performance of alternative energy firms in line with sustainable development goals in achieving a sustainable UK economy. This has not been previously studied.
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Copyright (c) 2024 Kolawole Ebire, Lucky Onmonya, Christopher Ofikwu, Deborah Adegbenro
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