This paper aims to investigate the relationship between working capital and profitability in the context of an emerging economy, such as the Chilean one. For this purpose, we analyzed data from a sample of manufacturing companies in the Santiago metropolitan region. The data concern the period 2016-2018 and were collected through the use of a questionnaire. To develop the research, we used the generalized least squares method, as it allows for more reliable results. The empirical results showed that the relationship between the single determinants of working capital and profitability is not linear, suggesting that, until the optimal size is reached, the relationship between working capital and profitability is positive. However, once the optimal size is exceeded, the relationship becomes negative.

This paper studies the relationship between leverage and its main determinants, focusing on Chilean SMEs. To develop the survey, we used trade-off theory and pecking order theory, as these theories are more suitable for explaining the financial decisions of SMEs. The companies analyzed were selected using a stratified sampling technique based on an economic criterion for three years (2016-2018). The research hypotheses were verified with a static, fixed effects (FE) model that also passed the robustness checks. The results showed that the size and tangibility of assets have a positive and significant influence on debt, while profitability has a negative and significant influence on financial leverage. On the contrary, the growth showed a statistically insignificant influence on debt.