Abstract:
Working capital management, which involves managing cash, inventory, and accounts
receivable, affects a firm’s short-term attainment. The purpose of this paper is to seek
to investigate the relationship between working capital management and firm value in
Sri Lankan firms. Data from 100 Sri Lankan firms a period of five years (2014-2018)
are used for this purpose and analysed using the regression technique. The results
indicate that there is a strong positive relation between the firm’s cash conversion
cycle, number of day’s account payable and firm size and its firm value. Although,
number of day’s account receivable and number of day’s inventory are found to be
significant with negative sign. Overall the results imply that the Sri Lankan firms need
to concentrate their limited resources on managing cash conversion cycle in order to
be improve firm value.
