Abstract:
A study of working capital management (WCM) is a major importance to
internal and external analysis of business. The goal of WCM is to ensure that the
company is able to continue its operations and it has sufficient cash flow to satisfy both
maturing short-term debt and upcoming operational expenses. Thus, the data were
collected from secondary sources mainly from financial report (i.e., financial year from
2003 to 2007) of the selected companies which were published by Colombo Stock
Exchange (CSE) to analyse the WCM practices in listed manufacturing companies in
Sri Lanka. The study used one-way analysis of variance (ANOVA) along with
necessary ratio analysis (i.e., ratio of inventory conversion period (ICP), debtors'
conversion period (DCP), creditors' conversion period (CCP) and cash conversion cycle
(CCC)]. The study analysed statistically which reveals that Abans Electricals Limited
(ABANS); ACL Cables Limited (ACL); and Lanka Aluminium Industries Limited
(LALU) manage their working capital more efficiently than other companies tike
ACME Printers and Package Limited (ACME); Associated Electrical Corporation
Limited (AEC); BOGALA Graphite Lanka Limited (BOGA); Central Industries
Limited (CIND); Ceylon Glass Company PLC Limited (GLAS); Dipped Products PLC
Limited (DIPP); and Kelani Cables Limited (KCAB). In addition, operational
hypotheses were formulated which publicize that mean ratios of ICP; DCP; CCP and
CCC of all companies differ significantly. Hence effective management of inventories
in this industry can ensure this growth more rapidly.
