Working capital management and corporate performance of listed manufacturing companies in Sri Lanka

Abstract

Working capital management plays a significant role in better performance of manufacturing firms. The researcher attempts to analyze the relationship between Working Capital Management and profitability under the heading of ―The impact of working capital management on corporate performance of Listed Manufacturing Companies in Sri Lanka‖, for the period 5 years from 2008 to 2013. For this purpose, balanced panel data of 36 manufacturing firms, which are listed in Colombo Stock Exchange, are used. The research objectives are to identify the nature and extend of the relationship between working capital management and profitability, to find out the impact of variables of working capital management on corporate profitability. Cash conversion cycle was used as a comprehensive measure for working capital management and net operating profitability was used as a measure of profitability. Multiple linear regression tools were used to find out the relationship between independent and dependent variable in this research. The result of regression analysis found a significant positive relationship between Cash Conversion Cycle and Net Operating Profitability.