Name – Pushkar Rahul Oak

Div. – B Roll No. 117

PRN – 1062210589
Course – BBA General

MA FAT 2 Assignment
LITERATURE REVIEW

Topic - Working Capital Management and Its Impact on Profitability

Author – Nimalathasan Balasundaram

Introduction –
Most businesses have a significant amount of cash invested in their working capital as well
as significant amounts of short-term payables. Companies keep an ideal working capital
balance in order to maximize their value. Higher sales may arise from a large inventory and
a generous trade credit programme. A greater inventory reduces the likelihood of a stock-
out.
Working capital management refers to decisions about working capital and short-term
funding (WCM). WCM guarantees that a firm has enough cash flow to satisfy its short-term
debt commitments and operating expenditures. Working capital management entails
keeping track of goods, accounts receivable and payable, and cash. Working capital
management is a fantastic technique for many businesses to increase their profits.
Scope –
The study's focus is restricted to listed manufacturing companies in Sri Lanka. Thirty-one
firms are listed on the Colombo Stock Exchange in the industrial sector (CSE). Only 10
companies were selected at random for the original study purpose of assessing the firm's
competitiveness.

Study –
The period of the study was five years from 2003 to 2007 financial year.
To meet the study's objectives and assumptions, data were acquired from secondary
sources, including the financial reports of the chosen enterprises issued by the CSE.
The study's secondary data were obtained from audit reports of the key firms, that were
found to be very reliable and accurate. While scanning data and info from sources,
necessary checks and counter checks were done. For the present study, the researcher
fulfilled validity.
In this study, we used correlation and regression to examine our data. The computer does
the complete analysis for the research. To evaluate the data, a well-known statistical tool
such as 'Statistical Package for Social Sciences' (SPSS) 13.0 Version was utilised.
Conclusion –
The study's goal is to determine the impact of working capital management on
manufacturing companies. CCC and ROA have a negative correlation of -0.127, which is
extremely meaningful at the 1% significance level. This implies that raising the amount of
days in the cash conversion process by one day leads to a 5.03% decrease in ROA. The
findings suggest that managers can improve manufacturing firm profitability by reducing
inventory and accounts receivable.

*THE END *

Bibliography –

https://www.researchgate.net/publication/
216665316_Working_Capital_Management_and_Its_Impact_on_Profitability

Citation -

Balasundaram, N. (2010) Working Capital Management and Its Impact on Profitability,

ResearchGate. University of Jaffna. Available at:
https://www.researchgate.net/publication/216665316_Working_Capital_Management_
and_Its_Impact_on_Profitability (Accessed:2022).