Working Capital Management Policy and Its Financing Across Selected Enterprises According to Size in the Czech Republic

The aim of this chapter is to evaluate whether the policy of working capital management and its financing affects the profitability of enterprises divided by size in the Czech Republic and thus to find out the differences in the management of working capital across the size of enterprises. In order to fulfill the goal of this article, Granger causality and the generalized method of moments, the so-called GMM, will be used. The data sample will include data for the period 2012–2021. The analysis will include companies operating in the Czech Republic, which are divided according to size into medium-sized companies, large companies, and very large companies. The result will be to find out whether and how the management of working capital and its financing affects the profitability of enterprises according to size and whether there are differences in this connection across enterprises according to size in the Czech Republic. It was found that if medium-sized enterprises want to achieve higher profitability, they should apply a more aggressive working capital management policy and a more aggressive working capital financing policy. On the contrary, in order to increase profitability, large enterprises and very large enterprises should apply a more aggressive working capital management policy, but on the contrary, a more conservative working capital financing policy compared to medium-sized enterprises.