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WORKING CAPITAL AS AN INDICATOR OF FINANCIAL SUSTAINABILITY: EMPIRICAL STUDY OF THE CHEMICAL INDUSTRY IN BULGARIA
Abstract
The present study examines working capital as a key indicator of financial sustainability. The focus is placed on its role in ensuring the resilience of enterprises operating within the chemical industry in Bulgaria. Given the sector's cyclical volatility, the research emphasizes the necessity of effective working capital management as a prerequisite for maintaining corporate liquidity and solvency. From a theoretical perspective, the study explores the nature and scope of working capital, its structural components, and their relationship with financial sustainability indicators. The research investigates the correlation between working capital levels and key financial ratios, including liquidity, solvency, and the cash conversion cycle. The empirical investigation encompasses Bulgarian enterprises in the chemical manufacturing sector and covers a five-year period using data extracted from the companies' annual financial statements. Both horizontal and vertical analyses have been performed, and several key financial ratios have been calculated, including the current ratio, quick ratio, inventory turnover ratio, and accounts receivable collection period. The primary objective is to identify existing interdependencies and assess these enterprises' ability to maintain financial stability under crisis conditions. Where possible, the analysis also aims to evaluate the impact of implemented working capital management strategies on the companies' financial soundness.
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