This study investigated whether a change in the working capital assets structure has an
impact on the level of profitability of companies, an under researched topic in the
financial literature. Companies’ financial data were used to perform different statistical
tests on working capital policy models and evaluated with STATA. The theory of networking
capital formed the background for this study. The research questions explored
the working capital policies’ relationship with profitability strategy in small nonfinancial
firms. The study’s financial ratios were the working capital investment policy; working
capital financing policy (independent); return on assets (dependent); and the firm’s size,
growth, and financial leverage as control variables. Data were collected from the
financial statements of 100 companies through their Form 10-K submitted to the
Securities and Exchange Commission. The proposed relationships were tested through
statistics, F- test, and regression. The findings indicated that working capital variables
and profitability are statistically significant predictors of corporate working capital policy
decisions. Firms will have more profit if more current assets fund working capital
investment. Also, findings suggest that, in comparison to a firm with high usage of
current liabilities, a firm with low usage of current liabilities may lead to positive results
in the firm’s working capital policy. This study confirmed that size, growth, and financial
leverage ratio are potent tools that mitigate risk of achieving profitability in companies.
These findings may drive improved profitability performance for corporate leaders in
small and medium size corporations and increase the firm’s growth. This improved
profitability may decrease unemployment and lead to a higher standard of living.