An Assessment of the Benefits of Optimizing Working Capital and Profitability: Perspectives from DJIA30 and NASDAQ100

The objective of this paper goes beyond the boundaries an exploratory analysis to operationalize association between corporate working capital and return on assets. This optimizes impact Cash Conversion Cycle (CCC) Return Assets (ROA). develops a mathematical formulation that connects components CCC ROA. sample includes non-financial firms listed in DJIA30 NASDAQ100. data covers quarterly periods from June 1992 March 2018. uses standard statistical tests including linearity (RESET), Hausman test for fixed random effects, Breusch–Pagan/Cook–Weisberg heteroskedasticity. estimation is carried out using GLS estimator. study finds: (a) optimal, rather than observed, are robust coherent, (b) if were optimize CCC, ROA improves significantly, (c) positive estimates size show help grow, (d) effects either observed or optimal reached short term (four quarters), (e) results as well able detect structural break 2008 financial crisis, (f) logit optimization algorithm significant increases associated with degree leverage decreases short-term debt ratio. contributes related literature two ways. First, structure associates way offers guide managers regarding management CCC. Second, examines impacts optimized