The Effect of Working Capital Development on Financial Performance of Organization

In today's challenging economy, with increasing environmental pressures and limited external resources, the current assets and liabilities as working capital have great importance and Optimal management of working capital of firms can be considered as a Competitive advantage for them. The main axis of this research is how development of working capital management influences on profitability and liquidity as two important factors of financial performance. This paper is an analytical - descriptive research that reviews the existing literature in this field and classifies them into two groups including the impact of working capital strategies on the performance and the other one is the impact of working capital indicators on the performance. This survey investigates the relationship between working capital strategies and working capital indicators with the performance of organization. The survey result shows that the impact of working capital strategies and indicators on profitability and liquidity should be considered simultaneously in development of working capital management