Impact of Working Capital Management and Capital Structure on Earnings in Indian Chemical Sector

This paper intends to check the impact of working capital policy and capital structure on EPS of firms in the Indian chemical sector. The current ratio was taken as representative of the result of working capital management policy and two measures of leverage as the bench mark for capital structure. Supplementary analysis was also undertaken to assess the impact of fourteen control variables on EPS. It is found from the empirical analysis that capital structure is not an important factor to affect EPS but working capital management policy affects EPS positively. Furthermore, the research results based on analysis and tests applied on the data could be used in formulating some policy recommendations on how management of profitability could be improved by chemical firms in India.