The impact of corporate trade credit policy on profitability ratios: a case study of listed companies in the Vietnamese basic materials industry
Abstract
The objective of the study is to test the impact of corporate trade credit policy on profitability ratios of listed companies in the Vietnamese basic materials industry. The study uses GMM to estimate a balanced panel data model. A data set of 290 observations has been collected from 58 basic materials companies listed on HNX and HOSE in the period 2015 – 2019. The research results show that there exists a nonlinear relationship between the accounts receivable and the profitability ratios of the listed companies in the basic materials industry. An optimal ratio of accounts receivable is determined to maximize the profitability of these businesses. Specifically, if the accounts receivable is approximately 17% of total assets, the bussiness’ profitability ratios are expected to reach the highest value. In addition, the study reveals the determinants of accounts receivable that businesses can rely on to adjust their receivables in order to increase the profitability ratios.