Effects of Working Capital Management on SME Profitability
The corporate finance literature has traditionally focused on the study of long-term financial decisions. Researchers have particularly offered studies analyzing investments, capital structure, dividends or company valuation, among other topics. But the investment that firms make in short-term assets, and the resources used with maturities of under one year, represent the main share of items on a firm's balance sheet. In fact, in the authors' sample the current assets of small and medium-sized Spanish firms represent 69.48 percent of their assets, and at the same time their current liabilities represent more than 52.82 percent of their liabilities.