The Mediating Effect of Profitability on the Relationship Between Working Capital Management and Sustainable Growth

This study investigates the relationship between working capital management and sustainable growth, taking into account the mediating role of profitability. The study uses a sample of non-financial companies that were listed on the Thai Stock Exchange between 2010 and 2020. This study documents the absence of direct relationship between working capital management and sustainable growth using fixed effects regression models. Nonetheless, it is found that profitability appears to be a mediating factor in this relationship. Companies can attempt to minimize their cash conversion cycle to enhance their profitability, which will further help them raise their sustainable growth. Furthermore, companies with higher operating cash flows and those with lower financial debt are able to achieve higher profitability and sustainable growth. Remarkably, this study shows that large companies are more profitable and have higher sustainable growth than smaller ones.