THE WORKING CAPITAL MANAGEMENT EFFECT ON PROFITABILITY OF ENERGY COMPANIES IN TURKEY, BASED ON DIFFERENT BUSINESS CYCLES

Purpose - This study aims to investigate the effect of business cycle on the relation between working capital management and corporate performance.Methodology - We examine the relation between working capital and profitability under economic down and upturns, on energy firms which are traded on Istanbul Stock Exchange and included in BISTELKT index. Working capital is measured by cash conversion cycle. EBIT to total assets ratio is used to represent profitability and business cycle is modeled by gross domestic products. Data is on quarterly basis from 2012 to 2018.Findings - The analysis shows that there is a negative relation between cash conversion cycle and profitability during economic growth, while a reverse relation exists in economic recession periods.Conclusion- The study shows that the efficient working capital management is important in terms of the firms' profitability, and must be included in financial planning especially in the times of economic upturns.

Keywords:

Working capital management, cash conversion cycle, profitability gross domestic products, Turkey energy company index,

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