EFFECTS OF WORKING CAPITAL ON PROFITABILITY OF LISTED CONSTRUCTION ENTERPRISES IN VIETNAM

Abstract

The data was collected from the audited financial statements of 38 construction firms listed on Ho Chi Minh City Stock Exchange and the Hanoi Stock Exchange in five years 2015-2019. The author has used research models including minimum regression, first-order difference model, fixed-effects model, random-effects model and general momen model in order to test the relationship between net working capital and profitability through two indicators, the ratio of net working capital (WCR) and ROA. The analytical results show that there is a non-linear relationship between the net working capital ratio (WCR) and entity's profitability, namely in an inverted U-shape, and there is a WCR value that gives the most optimal business profitability.