Factors Determining Working Capital Management in Cement Industry

This paper investigates the determinants of working capital management in cement industry in India. The authors use net liquid balance and working capital requirements as measures of investing working capital management of the industry. The factors that have been considered for the study are size, business indicator, firm performance, growth of the firm, debt-equity ratio and operating cash flow. When net liquid balance is considered as the dependent factor, the factors that influence significantly are the size and debt ratio. On the other hand, when the working capital ratio is considered as the dependent factor, the factors that impact significantly are size of the firm, operating cash flow, business indicator and growth. The results suggest that there is a lack of consistent evidence of the factors influencing working capital management in cement industry. Overall, the study concludes that only size of firm affects both net liquid balance and working capital ratio in a company’s working capital management.