Working capital management (WCM) is a fundamental aspect of corporate financial management that ensures the efficient utilization of short-term assets and liabilities to maintain liquidity, operational efficiency, and profitability. Effective management of cash, inventories, accounts receivable, and accounts payable enables firms to optimize resource allocation, reduce financing costs, and improve financial performance. This review article examines the relationship between working capital management and corporate profitability by synthesizing theoretical foundations and empirical evidence from prior studies. It explores the key components of working capital, measurement techniques, and the mechanisms through which WCM influences profitability. The review also discusses the challenges organizations encounter in managing working capital and highlights emerging trends in digital financial management. The findings indicate that efficient working capital management significantly enhances profitability, liquidity, and shareholder value while contributing to sustainable business growth.
Keywords: Working Capital Management, Corporate Profitability, Liquidity Management, Cash Conversion Cycle, Financial Performance, Accounts Receivable, Inventory Management, Corporate-Finance