The Impact of Accounts Receivable on Company Profitability Under the Role of the Financing Structure Evidence from EGX

نوع المستند : المقالة الأصلية

المؤلفون

1 Accounting Department, Faculty of Management, Modern University for Technology and Information, Cairo, Egypt

2 Accounting Department, Faculty of Management, Economics and Business Technology, Egyptian Russian University (ERU), Egypt

المستخلص

This study investigates the impact of accounts receivable (AR) on corporate profitability under the moderating role of financing structure, using evidence from the Egyptian Exchange (EGX). While prior research has extensively explored the relationship between working capital management and profitability, the role of financing structure in shaping this relationship remains underexplored, particularly in emerging markets. By analyzing a sample of 138 companies listed on the EGX from 2000 to 2018, this study employs a moderated regression framework to examine how financing structure—measured by the debt-to-equity ratio—influences the relationship between AR turnover and profitability, as measured by Return on Equity (ROE). The findings reveal that effective AR management has a positive but relatively weak impact on profitability. However, the study highlights the critical moderating role of financing structure, showing that firms with higher debt levels experience a negative impact on profitability, aligning with the trade-off theory of capital structure. Conversely, firms with lower leverage exhibit greater financial flexibility, which enhances the positive effects of AR management on profitability. By addressing the research gap on the interaction between AR management and financing structure, this study contributes to the broader academic discourse on working capital management and corporate finance. It offers practical insights for managers on optimizing AR policies and financing strategies to enhance profitability, particularly in emerging markets where institutional and regulatory environments differ from those in developed economies. The findings underscore the importance of balancing debt and equity financing to mitigate financial risks and improve liquidity, providing valuable implications for both practitioners and policymakers in the context of the EGX and similar markets.

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