The Impact of Working Capital Management on Profitability: Empirical Evidence from Vodafone Ghana

Stephen Gbambil Tobazaa1* & John Gartchie Gatsi2
Accra Institute of Technology (AIT), Department of Business, Accra, Ghana
University of Cape Coast, Ghana
DOI – http://doi.org/10.37502/IJSMR.2025.8706

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Abstract

This study investigates the impact of working capital management on the profitability of Vodafone Ghana, focusing on the period from 2016 to 2020. Employing a quantitative longitudinal design, the research relies exclusively on secondary data extracted from the company’s audited financial statements. Profitability is measured using Return on Assets (ROA) and Return on Equity (ROE), while key working capital indicators include the Cash Conversion Cycle (CCC), Accounts Receivable Period (ARP), Accounts Payable Period (APP), and Inventory Turnover Ratio (ITR). Firm Size (FS) and Current Ratio (CR) are incorporated as control variables. Descriptive statistics, correlation analysis, and multiple regression techniques are used to analyze the data. Results show that ROA is significantly influenced by CCC, ARP, ITR, and CR, with longer receivable periods and extended cash cycles reducing profitability, while inventory efficiency and liquidity enhance it. Conversely, the model for ROE is statistically insignificant, suggesting that shareholder returns are more sensitive to broader financial strategies than to working capital practices. The findings underscore the operational relevance of working capital management in enhancing asset-based profitability and offer practical and policy-level recommendations to improve financial performance in the telecommunications sector.

Keywords – Working Capital Management, Return on Assets, Vodafone Ghana

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