The paper is made with an attempt to bridge the gap in the literature by offering empirical evidence about working capital management and its effect to the performance of Malaysian listed companies from the perspective of market valuation and profitability. The secondary data for analysis is retrieved from Bloomberg's Database of 172 listed companies randomly selected from Bursa Malaysia main board for five year period from 2003 to 2007. The study aims to explore the effects of working capital component i.e cash conversion cycles (CCC), current ratio (CR), current asset to total asset ratio (CATAR), current liabilities to total asset ratio (CLTAR), and debt to asset ratio (DTAR) to the firm's performance by looking at firm's value i.e Tobin Q (TQ) and profitability i.e. return on asset (ROA) and return on invested capital (ROIC). Applying correlations and multiple regression analysis, the result shows that there are significant negative associations between working capital variables with firm's performance. Thus it highlights the importance of managing working capital requirements to ensure an improvement in firm's market value and profitability and this aspect must form part of the company's strategic and operational thinking in order to operate effectively and efficiently.

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Despite the fact that working capital management (WCM) is vital to businesses of any size that operated in developed and emerging countries, WCM is of particular importance to the small business firms operating in emerging markets. The importance of WCM to small and mediumsized enterprises (SMEs) stems from the limited financial resources available and heavily reliance of SMEs on WCM as a main source of finance. This study aims to provide empirical evidence on the effects of working capital investment policy on firm's financial performance for a sample of 103 small and medium-sized firms listed with the SME Corporation of Malaysia. Data for the period from 2008 to 2013 are analysed to examine if investment policy improves firms' return on total asset. By using correlation and pooled ordinary least square regression, the result provides a significant relationship between the level of aggressiveness of investment policy and SME's financial performance. The findings of this study not only contribute to the scant WCM literature in Malaysia but throw light on the importance of efficient WCM to the policy makers and regulators in motivating and encouraging relevant parties to pay more attention on working capital through improving investors' awareness and improving transparency.

This is an Open Access article distributed under the terms of the Creative Commons Attribution-Noncommercial 4.0 Unported License, permitting all non-commercial use, distribution, and reproduction in any medium, provided the original work is properly cited.

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