![Open Access](https://i-scholar.in/lib/pkp/templates/images/icons/fulltextgreen.png)
![Restricted Access](https://i-scholar.in/lib/pkp/templates/images/icons/fulltextred.png)
![Open Access](https://i-scholar.in/lib/pkp/templates/images/icons/fulltextgreen.png)
![Open Access](https://i-scholar.in/lib/pkp/templates/images/icons/fulltext_open_medium.gif)
![Restricted Access](https://i-scholar.in/lib/pkp/templates/images/icons/fulltextred.png)
![Restricted Access](https://i-scholar.in/lib/pkp/templates/images/icons/fulltext_restricted_medium.gif)
Impact of Working Capital Management on Profitability among Sugar Manufacturing Companies in India
Subscribe/Renew Journal
Working capital management plays a vital role in sustaining a company’s short-term operational cash requirements. For sugar manufacturing companies, the most important component of working capital is inventory. Thus, working capital management is all the more important due to the long inventory cycles they face. The present study examines the impact of working capital on profitability among sugar manufacturing companies in India. The data for the study was collected from a sample of 15 major Indian sugar manufacturing companies, pertaining to the study period 2008-18. The study uses fixed-effects panel regression analysis rather than pooled regression, as the fixed-effects panel regression allows control for company-specific differences in profitability as well as for year-to-year differences in profitability for the industry as a whole. The results of the study suggest that from among the working capital variables, payables was found to have significant negative impact on the profitability of sugar manufacturing companies; and from among the control variables, debt-equity ratio was found to have a significant negative impact on profitability, and fixed assets turnover ratio was found to have a significant positive impact on profitability.
Keywords
Working Capital Management, Sugar Industry, Inventory, Receivables, Payables, Fixed-Effects Panel Regression Analysis.
Subscription
Login to verify subscription
User
Font Size
Information
- Afza, T., & Nazir, S. M. (2009). Is it better to be aggressive or conservative in managing working capital?
- IUP Journal of Applied Finance, 15(8), 19-30.
- Aggarwal, A., & Chaudhary, R. (2015). Effect of working capital management on the profitability of Indian firms. IOSR Journal of Business and Management, 17(8), 34-43.
- Azhar, N., & Noriza, M. (2010). Working capital management: The effect of market valuation and profitability in Malaysia. International Journal of Business and Management, 5(11), 140-147.
- Chatterjee, S. (2012). The impact of working capital on the profitability: Evidence from the Indian firms. SSRN Working Paper Series. Retrieved from https://ssrn.com/abstract=2125228
- Dash, M., & Hanuman, R. (2015). A goal programming model for working capital management. Journal of Management and Science, 5(1), 7-16.
- Deloof, M. (2003). Does working capital management affect profitability of Belgian firms? Journal of Business Finance and Accounting, 30(3/4), 573-587.
- Driscoll, J., & Kraay, A. (1998). Consistent covariance matrix estimation with spatially dependent panel data. The Review of Economics and Statistics, 80(4), 549-560.
- Ganesan, V. (2007). An analysis of working capital management efficiency in telecommunications equipment industry. Rivier Academic Journal, 3(2), 1-10.
- Jose, M. L., Lancaster, C., & Stevens, J. L. (1996). Corporate returns and cash conversion cycle. Journal of Economics and Finance, 20(1), 33-46.
- Kebewar, M. (2013). Does debt affect profitability? An empirical study of French trade sector. HAL ArchivesOuvertes, halshs-00780310. Retrieved from https://alshs.archives-ouvertes.fr/halshs-00780310
- Mathuva, D. M. (2009). The influence of working capital management components on corporate profitability: A survey on Kenyan listed firms. Research Journal of Business Management, 4(1), 1-11.
- Ponsian, N., Chrispina, K., Tago, G., & Mkiibi, H. (2014). The effect of working capital management on profitability. International Journal of Economics, Finance and Management Sciences, 2(6), 347-355.
- Rehman A. (2006). Working capital management and profitability: Case of Pakistani firms (Unpublished Dissertation). COMSATS Institute of Information Technology (CIIT), Islamabad, Pakistan.
- Rehman, A., & Nasr, M. (2007). Working capital management and profitability - Case of Pakistani firms. International Review of Business Research Papers, 3(1), 279-300.
- Shin, H., & Soenen, L. (1998). Efficiency of working capital and corporate profitability. Financial Practice and Education, 8(2), 37-45.
- Singhania, M., Sharma, N., & Yagnesh, R. J. (2014). Working capital management and profitability: Evidence from Indian manufacturing companies. Decision, 41(3), 313-326.
- Soenen, L. A. (1993). Cash conversion cycle and corporate profitability. Journal of Cash Management 13(4), 53-58.
- Vishnani, S., & Shah, B. (2007). Impact of working capital management policies on corporate performance: An empirical study. Global Business Review, 8(2), 267-281.
![](https://i-scholar.in/public/site/images/abstractview.png)
Abstract Views: 340
![](https://i-scholar.in/public/site/images/pdfview.png)
PDF Views: 1