Impact of working capital on the profitability of SMEs in Ecuador
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Abstract
The management of a company’s working capital is of great importance in the current scenario, especially because of its impact on operational
efficiency. Business sustainability can only be achieved by organizations that maintain a balance between profitability and liquidity. The
purpose of this research was to examine its impact on the performance of microenterprises engaged in wholesale and retail activities in Ecuador.
To this end, secondary data from 1,634 companies registered with the Superintendency of Companies, Securities, and Insurance for the year 2023
were used. Through a statistical prediction technique, it was possible to identify the elements of working capital that are associated with the
performance of the selected firms. The results show that variables such as leverage, company age, equity strength, and operating profitability
have a positive relationship with profitability. In contrast, the average collection period and asset turnover did not reflect significant effects, while
higher customer turnover was negatively associated with financial performance. These findings show that efficient management of the elements
that make up working capital favors not only profitability but also stability and the creation of business value. In a competitive environment with
limited access to financing, these practices are crucial for strengthening the permanence of microenterprises in the Ecuadorian business structure.
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