Version 1
: Received: 5 December 2023 / Approved: 6 December 2023 / Online: 6 December 2023 (10:44:00 CET)
Version 2
: Received: 8 December 2023 / Approved: 12 December 2023 / Online: 12 December 2023 (11:12:48 CET)
Version 3
: Received: 12 December 2023 / Approved: 13 December 2023 / Online: 13 December 2023 (05:03:58 CET)
Panigrahi A, Working capital management strategies and financial performance: A cause-and-effect analysis. J Manag Res Anal 2024;11(1):3-11
Panigrahi A, Working capital management strategies and financial performance: A cause-and-effect analysis. J Manag Res Anal 2024;11(1):3-11
Panigrahi A, Working capital management strategies and financial performance: A cause-and-effect analysis. J Manag Res Anal 2024;11(1):3-11
Panigrahi A, Working capital management strategies and financial performance: A cause-and-effect analysis. J Manag Res Anal 2024;11(1):3-11
Abstract
Numerous studies have been conducted in past so as to understand whether the working capital management policies of an organisation affect its performance or not. Some studies have found a positive relationship between WCM and firm performance. However, other studies have found a negative impact of WCM on firm performance. Present research work is an endeavour in this direction to find out the working capital management policies and strategies of Indian cement companies and their performances. The study employs a quantitative approach to examine whether the Indian cement companies optimally use their working capital, which is analysed by establishing the relationship between the working capital management and profitability using 11-year (2010-2021) financial data of 31 cement companies listed in Bombay Stock Exchange (BSE). The findings of the random-effects model say that only ITP is significantly negatively related to the ROA of the cement companies at a 0.01 level of significance. Similarly, APP also negatively yet poorly predicts ROA at a 0.10 level of significance the firm’s profitability is not significantly affected by ARP and CCC. Also, it has been observed that the liquidity measures CR and QR have a significant positive association with ROA. Further, the size of the industries and leverage are inversely related to ROA but the age of the firm is not significantly predicting their financial performance.
Keywords
Working Capital Management; Profitability; Indian Cement Industry; Bombay Stock Exchange; Panel Data
Subject
Business, Economics and Management, Finance
Copyright:
This is an open access article distributed under the Creative Commons Attribution License which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited.
Commenter: Ashok Panigrahi
Commenter's Conflict of Interests: Author