WORKING CAPITAL'S IMPACT ON OIL INDUSTRY PROFITABILITY

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Date

2021

Journal Title

Journal ISSN

Volume Title

Publisher

СДУ хабаршысы - 2021

Abstract

Abstract. Working capital management (WCM) is an important aspect of financial management to ensure efficient use of current assets and liabilities to balance between profitability and liquidity. Even though there is no absolute perfect answer, financial managers need to formulate a proper strategy for the working capital. WCM in the oil industry is particularly important due to the following reasons; a) There is a huge demand for its products, b) Oil and its products are key inputs for other manufacturing industries, c) Oil prices are too sensitive to political, social and economic factors, d) Crude oil extraction capacity periodically changes. Therefore, firms in this sector need to have flexible production levels so that they keep a balance between the purchase of crude oil and sales of processed oil. A multiple OLS regression method was applied to examine the effect of WCM on profitability in the Oil Industry. The data contained 231 observations from 21 oil companies listed on NYSE and KASE between 2010 and 2020 years. Findings indicated that downstream oil companies need to focus more on the management of credit policies, debt management, and fixed assets management.

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Keywords

Working Capital, Oil Firms, Profitability, Cash Conversion, СДУ хабаршысы - 2021, №3

Citation

Y. Bekbauov , K. Bekbolat , U. Choban / WORKING CAPITAL'S IMPACT ON OIL INDUSTRY PROFITABILITY / СДУ хабаршысы - 2021