Working capital management on ensuring significant earnings in Sri Lanka (with special reference to listed companies)

Abstract

working Capital management is to ensure that the firm has adequate working capital for its opration, neither too much not too little. Investing heavily in current assets will drain the lll'lll'ti comings and inadequate investment in current assets will reduce the firm's credibility UN It ulYccts the firm's liquidity. Working Capital Management has its effect on liquidity as Well as on Earnings of the company. A company's earnings is determined mainly by way of as working capital management. The efficient management of working capital is likely to yield significant results and its neglect can be highly dangerous to the any company. The purpose of this paper is to examine the relationship between Working Capital management tiiid eurnings. The dependent variable, ROE, ROl and EPS are used as a measure of earnings ilinl the relationship between working capital management and earnings is investigated for a wimple of forty companies which are listed in CSE, using the secondary quantitative data wmlysis for the period 2006-20 lO.The independent variables used in the analysis are ACI\AIP,APP and CCC. Correlation and simple regression analysis are used for analysis. Through this analysis all the Working capital management components have no significant ivlalionship with earnings in Sri Lanka.