Relationship of Working Capital with Stock Turnover in the Companies Listed in Tehran Stock Exchange

This study aimed to investigate the relationship between working capital and stock turnover in the companies listed in Tehran Stock Exchange (TSE). In terms of purpose, the present study is an applied research. The study adopted a descriptive method and a survey design. The population of the study consisted of all companies listed in TSE, which amounted to 510 companies from 2004 to March 19, 2012 based on Rahavard Novin software. Following screening and elimination of outlier observations, the sample size consisted of 75 companies. The results of fitted regression equation showed a significant correlation of cash, collection of accounts receivable and inventory cycle in the companies with stock turnover at 0.05 level of significance. However, there was no significant relationship between the payment period of accounts payable and stock turnover at 0.05 level of significance. Based on the total significance of the model at 0.05 level of significance and the results of Granger causality test, it was concluded that there was a significant correlation between working capital and stock turnover in the companies listed in TSE so that working capital could account for 71 percent of variations in stock turnover. In the end, some viable recommendations are made for companies and some research suggestions are made for future studies.