Working Capital Management and Firms Profitability
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This study is a modest endeavor to find out the effects of Working Capital Management (WCM) on the profitability of pharmaceutical companies in Bangladesh. Return on Asset (ROA), Return of Equity (ROE) and Earning per Share (EPS) have been used as the measures of profitability and Average Collection Period (ACP), Average Payment Period (APP), Inventory Conversion Period (ICP), Cash Conversion Cycle (CCC), and Investment in Marketable Securities (INV) served as the representatives of working capital management. Correlation analysis depicts a negative relationship of ICP, CCC, and INV with profi...
This study is a modest endeavor to find out the effects of Working Capital Management (WCM) on the profitability of pharmaceutical companies in Bangladesh. Return on Asset (ROA), Return of Equity (ROE) and Earning per Share (EPS) have been used as the measures of profitability and Average Collection Period (ACP), Average Payment Period (APP), Inventory Conversion Period (ICP), Cash Conversion Cycle (CCC), and Investment in Marketable Securities (INV) served as the representatives of working capital management. Correlation analysis depicts a negative relationship of ICP, CCC, and INV with profitability. ROA and EPS have positive relationship with ACP, whereas negative relationship with APP. On the other hand, ROE has an insignificant relationship with both ACP and APP. Overall; regression analysis finds significant association between WCM and profitability. Therefore, this research concludes that efficient working capital management is critical for the profitability of firms.
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