Impact of Working Capital Management on Profitability - A Case of the India Cement Limited

Abstract

Working capital management has its impact on the liquidity and profitability of a firm. This study examined the influence of working capital management on corporate profitability in The India Cement Limited. The relationship between the dependent variable, return on investment (ROI), and the independent variables (some important ratios relating to working capital management) was assessed for a period of 11 years (2001–2011). A stepwise linear multiple regression analysis (MRA) was conducted to assess the impact of working capital management on the ROI. The study of MRA revealed that the slope of regression line associated with current asset to sales ratio (CASR) shows a statistically significant negative impact of the CASR on the profitability of the company during the study period.