Literature ReviewMany researchers h

Literature Review
Many researchers have studied working capital from different views and in different
environments. The following ones were very interesting and useful for our research:
(Eljelly, 2004) elucidated that efficient liquidity management involves planning and
controlling current assets and current liabilities in such a manner that eliminates the risk
of inability to meet due short-term obligations and avoids excessive investment in these
assets. The relation between profitability and liquidity was examined, as measured by
current ratio and cash gap (cash conversion cycle) on a sample of joint stock
companies in Saudi Arabia using correlation and regression analysis. The study found
that the cash conversion cycle was of more importance as a measure of liquidity than
the current ratio that affects profitability. The size variable was found to have significant
effect on profitability at the industry level. The results were stable and had important
implications for liquidity management in various Saudi companies. First, it was clear that
there was a negative relationship between profitability and liquidity indicators such as
current ratio and cash gap in the Saudi sample examined. Second, the study also