IMPACT OF EFFECTIVE WORKING CAPITAL MANAGEMENT AND FINANCIAL FLEXIBILITY ON THE SUSTAINABLE GROWTH GAP: AN APPLIED STUDY OF INDUSTRIAL COMPANIES IN IRAQ

Abstract

The research aimed to analyze the impact of working capital management efficiency and financial flexibility in the sustainable growth gap, by applying it to a sample consisting of (6) Iraqi industrial companies listed in the Iraq Stock Exchange, and these companies constitute 25% of the research community and for a period (2005-2014). Four independent variables were used, two related to the efficiency of working capital management (cash transformation cycle, working capital turnover), and the other two to financial flexibility (financial leverage ratio, cash liquidity ratio), while the dependent variable is the sustainable growth gap (which is the difference between the sustainable growth rate and the actual growth rate). And based on the statistical download program (Stata-V6), the (Panel Data) load was adopted for multiple regression according to the (fixed effect model) to test five hypotheses related to the statistical significance of the impact of each of the indicators of working capital management efficiency and financial flexibility on the sustainable growth gap and its function indicators. The results of the statistical tests indicated that all hypotheses had a significant and blind effect according to the fixed effect model and according to the calculated F-test, which had a P-value of less than 5%. The research concluded with several results, the most important of which is that there is a significant effect of the working capital turnover and the financial leverage ratio in the sustainable growth gap. Based on this, the recommendation to the Iraqi industrial companies must take into account these variables when planning to make the sustainable growth gap in a state of balance.