March 2026 (published: 13.03.2026)
Number 1(64)
UDC 658.153:658.15:330.145
DOI 10.17586/2310-1172-2026-19-1-28-39
Relationship between working capital management and financial performance
of Russian companies
Reference for citation: Sosnilo A.I., Konopaeva A.V. Relationship between working capital management and financial performance of Russian companies. Scientific journal NRU ITMO. Series «Economics and Environmental Management». 2026. № 1. Р. 28-39. DOI: 10.17586/2310-1172-2026-19-1-28-39.
Abstract. The relevance of the study is justified by the high sensitivity of companies' cash flows to changes in the economic environment and industry specifics in the current difficult economic conditions and constraints. The problems of the study are justified by the lack of unambiguous empirical conclusions about the nature of the relationship between the indicators of working capital management and financial performance of Russian companies, as well as in the limited range of models used to take into account the possible non-linearity of this relationship. The purpose of this study is to determine the nature of the relationship between the indicators of working capital management and financial performance of Russian companies. The study tested the hypothesis that the relationship between a company's financial cycle and its financial performance is nonlinear: as the duration of the financial cycle increases to a certain level, profitability increases, but a further increase in the financial cycle leads to a decrease in financial performance. The paper uses methods of regression analysis of panel data, as well as an analysis of financial coefficients. The study analyzed a research sample of an unbalanced panel of data on 2,684 companies representing various sectors of the economy (17,875 observations company-year) and identified the significance of fixed effects, which confirmed the relevance of using a fixed-effects model. The size of companies has a positive effect on profitability in all models. Large companies can enjoy more favorable terms in cooperation with suppliers and creditors, which allows them to achieve greater profitability. The financial leverage variable is negatively related to profitability, which confirms the fact that companies with a higher debt burden are less profitable. An analysis of the coefficients obtained indicates that at the initial stages, an increase in the length of the financial cycle can have a positive impact on the financial performance of companies. From a practical point of view, the results of the study indicate the need to move from universal recommendations for minimizing the financial cycle to a more balanced approach focused on determining optimal working capital management parameters, taking into account industry conditions, the scale of operations and the financial condition of the company.
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Keywords: working capital, financial stability, measures and indicators, liquidity, profitability.
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