In this paper we aim to specify the long term tendency of working capital in Turkey. Previous studies proved that working capital differentiated as per sectors and fluctuated over time.  As found appropriate for analyzing the cross-section dependency and multiple structural breaks, we perform Panel KPSS test to analyze the cash conversion cycles of seven manufacturing firms in Istanbul Stock Exchange (ISE) between the years of 1990 and 2009. In this study we find that cash conversion cycles to be stationary for all the sub-sectors regarding with constant and trend model as well as for the whole of the sample. Regarding the constant model we find the same inclination for the whole of the sample and all the sub-sectors except for main metal sector. In sum, it is arguable that fluctuating originates from the sector’s itself while macroeconomic structure is temporal. Besides, working capital level is reverting at a specific mean, implying that there exist working capital policies as well as optimal working capital levels.    

Keywords:Working Capital, Cash Conversion Cycle, Mean Reverting, Panel Unit Root Tests, Panel KPSS Test

JEL Classification:G31, G32