Working Capital Approaches and Firm's Profitability of Manufacturing Companies in Sri Lanka

Pirashanthini S, Tharmila K & Velnampy T(2013). Working capital approaches and firm’s profitability of manufacturing companies in Sri Lanka. Comprehensive Research Journal of Management and Business Studies (CRJMBS) Vol. 1(2) pp. 024 - 030

7 Pages Posted: 21 Jan 2014

Date Written: December 28, 2013

Abstract

Working capital is a vital part of business investment which is essential for continuous business operations. It is required by a firm to maintain its liquidity, solvency and profitability. Working Capital management explicitly impacts on both the profitability and level of desired liquidity of a business. In a way, the present is initiated to find out the relationship between the aggressive working capital policies and profitability, and to identify the impact of working capital policies on profitability with the samples of twenty Manufacturing companies listed under Colombo stock exchange (CSE) in Sri Lanka. Data representing the period of 2008-2012 were used for the survey. The correlation and regression model have been used to investigate the relationship among variables and impact of working capital approaches on returns of firms. The study found that there is no relationship between the profitability measures of firms and working capital investment and financing policies. Further, the working capital aggressive investment and financing policies have no impact on profitability measures of ROA and ROE.

Keywords: Working capital, Aggressive investment policy, Aggressive financing policy

JEL Classification: M41

Suggested Citation

S, Pirashanthini and Kanagalingam, Tharmila and Thirunavukkarasu, Velnampy, Working Capital Approaches and Firm's Profitability of Manufacturing Companies in Sri Lanka (December 28, 2013). Pirashanthini S, Tharmila K & Velnampy T(2013). Working capital approaches and firm’s profitability of manufacturing companies in Sri Lanka. Comprehensive Research Journal of Management and Business Studies (CRJMBS) Vol. 1(2) pp. 024 - 030, Available at SSRN: https://ssrn.com/abstract=2381890

Pirashanthini S

University of Jaffna ( email )

Sri Lanka
Jaffna, North 40000
Sri Lanka

Tharmila Kanagalingam

University of Jaffna ( email )

Sri Lanka
Jaffna, North 40000
Sri Lanka

Velnampy Thirunavukkarasu (Contact Author)

University of Jaffna ( email )

Sri Lanka
Jaffna, North 40000
Sri Lanka

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