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The relationship between working capital efficiency and profitability

The Journal of Accounting and Management

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Title The relationship between working capital efficiency and profitability
 
Creator CHISTI, Khalid Ashraf; Department of Business And Financial Studies
kashmir unversity, srinagar, 190006
J&K, India
 
Subject Earnings before Interest and Taxes; Cash conversion cycle; Net operating profitability & Regression analysis.
 
Description Working Capital Management has its effect on liquidity as well on profitability of the firm. In this paper a sample of the 16 Indian firms, listed on BSE including firms from different sectors of our economy for a period which extends to five years starting from 2006 to 2011 has been taken. An attempt has been made to examine the effect of different variables of working capital management including the Debt ratio, Average collection period, Inventory turnover in days, Average payment period, Cash conversion cycle and Current ratio on the Net operating profitability of sample firms. Descriptive and Regression are used for analysis. The results show that there is a strong negative relationship between variables of the working capital management and profitability of the firm except the sales (Size of the company). We also find that there is a positive relationship between size of the firm and its profitability. There is also a significant negative relationship between debt used by the firm and its profitability.
 
Publisher The Journal of Accounting and Management
 
Contributor —
 
Date 2013-01-20
 
Type Peer-reviewed Article
 
Format application/pdf
 
Identifier http://journals.univ-danubius.ro/index.php/jam/article/view/1449
 
Source The Journal of Accounting and Management; Vol 2, No 3 (2012): JAM
 
Language en
 
Rights The author fully assumes the content originality and the holograph signature makes him responsible in case of trial.