Letters in Economic Research Updates
Working Capital Management and Financial Performance of Moroccan Listed Companies A Panel Data Analysis over the 2021â2024 Period
Abstract
Rania Loubaris
This article analyzes the relationship between operating working capital requirement (WCR) management and the financial performance of Moroccan listed companies. The study is based on a balanced panel of ten non-financial groups observed from 2021 to 2024, representing 40 firm-year observations. Data are extracted from consolidated financial statements published in annual financial reports available from the Moroccan Capital Market Authority. WCR is proxied by the number of days of sales tied up in inventories and trade receivables, less days of trade payables. Performance is measured by return on assets (ROA). OLS estimates with time effects and firm-clustered standard errors indicate a negative and statistically significant association between WCR and ROA: one additional day of WCR is associated with a 0.018 percentage-point decrease in ROA. However, this relationship loses significance when firm fixed effects are introduced and remains only marginal in first differences. By contrast, relative indebtedness has a robust negative effect, while sales growth is positively associated with changes in performance. The individual WCR components are not significant. The results therefore call for distinguishing structural differences across sectors from short-term trade-offs within the same firm and do not support a causal conclusion.