Working capital policies and their impact on financial balance: An analytical study of data from a sample of industrial companies listed on the Iraqi Stock Exchange for the Period (2008-2022)

Abstract

This study aims to analyze the impact of working capital policies adopted by some industrial companies listed on the Iraq Stock Exchange on achieving financial balance. A descriptive and analytical approach was used, relying on the annual data of the surveyed companies, with regression tests applied to measure the impact of working capital policies on financial balance. The results revealed that working capital plays a vital role in determining the financial balance of the studied companies, as approximately 48% of the variation in financial balance is explained by working capital variables, confirming a strong relationship between working capital management policies and financial balance. The ratio of current assets to total assets was found to be the most influential indicator in this relationship. The study concludes that most companies adopted conservative working capital policies emphasizing liquidity and risk avoidance, while a few followed aggressive approaches focusing on profitability. Accordingly, it is recommended that companies adopt moderate working capital strategies that balance liquidity and profitability, ensuring flexibility and financial stability without exposing the company to excessive risk.