The aim of this study is to find the interaction and relationship between working capital
management and firms‟ profitability. As components of net working capital are kept at
optimal levels, this situation benefits company to use resources more efficiently and help
profitability. Similarly, high levels of profitability helps avoiding idle working capital
practices. .To investigate this relationship between these two, using a sample consisting
of six companies listed in the Egyptian stock exchange market, and 4 years data covering
years from 2013 to 2017. For this purpose, in this study the researchers used variable of
return on assets ratio to measure the profitability of company and variables of working
capital management. Regressions were run to analyze how profitability affects working
capital management which is measured in terms of Cash Conversion Cycle (CCC),
Current Ratio (CR), Average collection period (ACP), Average inventory period (AIP)
and Average payment period (APP). The hypothesis showed that there‟s a positive
relation between the average collection period and return on assets, current ratio and
return on assets, cash conversion cycle and return on assets. On the other hand there‟s an
insignificant negative relationship between both average payment period and average
inventory period with return on assets. The results indicate that through proper working
capital management allocation the company can improve their profit levels. Working
capital management plays a significant role in improved profitability of firms. Firms can
achieve optimal management of working capital by making the trade-off between
profitability and liquidity.