Impact of Working Capital Management on Corporate ProfitabilityEmpirical Evidence from Pharmaceutical Industry of Bangladesh
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Date
2018
Journal Title
Journal ISSN
Volume Title
Publisher
Canadian Center of Science and Education
Abstract
Working capital management plays centric role in enhancing operational efficiency and their ultimate
profitability. Globally financial managers have been searching the proper way on how to utilize working capital
components which prolong profitability. The purpose of this study is to assess the impact of working capital
components on profitability indicators of selected pharmaceutical firms in Bangladesh. The paper used financial
data of 9 pharmaceutical firms listed in Dhaka stock exchange (DSE) covered 2011-2015. Two methods were
used in this study for analysis data set. Firstly, to measure the relationship between selected variables Pearson
Correlation matrix was used. Secondly, multiple regression analysis was used to investigate the impact working
capital components on profitability of selected pharmaceutical firms. The study also conducted Durbin Watson
test to assess autocorrelation of selected variables. In this study the correlation matrix identified a negative
correlation between working capital components and profitability, whereas regression analysis found number of
days account receivable (AR) had significant positive and current ratio (CR) and debt ratio (DR) had appeared a
significant negative impact on profitability.
Description
Keywords
working capital, profitability, inventory period, number of days account receivables, number of days account payables, cash conversion cycle, logarithm of sales, pharmaceutical firms
Citation
Volume 10; Number 9; 2018; Page: 136-144